Review

For seven quarters following the severe U.S. economic slowdown of 1973-75, the foreign exchange value of the dollar rose substantially, increasing by about 8 percent on a trade-weighted basis. The dollar declined slightly only against the currencies of Canada and Switzerland. The most dramatic increases in the foreign exchange value of the dollar over 1975-76 were against the British pound and the Italian lira. In terms of the British pound, the value of the dollar rose by about 30 percent, and against the Italian lira the dollar rose by about 26 percent.

Professor Karl Brunner is a faculty member at bath the University of Rochester, New York, and the University of Bern, Switzerland, and is one of the foremost scholars in the field of monetary theory and policy. He is also a periodic contributor to this Review. In the following interview, which originally appeared in the July 1978 issue of The Banker, Professor Brunner outlines his interpretation of the monetarist approach to economic analysis in response to comments and questions posed by the publishers of The Banker.