Black Wednesday - a Re-Examination of Britain's Experience in the Exchange Rate Mechanism

IEA Occasional Paper No. 135

44 Pages Posted: 3 Jun 2005

See all articles by Alan Budd

Alan Budd

University of Oxford - Department of Economics

Abstract

In 'Black Wednesday', Alan Budd discusses the contribution of ERM membership to Britain's recent economic performance. Budd suggests that Britain joined the ERM 'in despair' after trying various methods of controlling monetary growth without the success that had been anticipated. Whilst membership of the ERM did not happen at an ideal time, because of serious imbalances within and between member economies in the late 1980s, it did provide a discipline to reduce inflation that might have been difficult to maintain without membership. The author discusses how membership of the ERM was a necessary precondition for the adoption of the stable and successful monetary arrangements that Britain has today.

Samuel Brittan, Tim Congdon and Derek Scott provide commentaries on Budd's analysis. Congdon and Scott in particular have reservations about the case that Budd makes.

This collection provides an important contribution to the analysis of a very significant event in Britain's recent economic and political history.

Keywords: Monetary Policy, Exchange Rate

JEL Classification: E00, E40, E42

Suggested Citation

Budd, Alan, Black Wednesday - a Re-Examination of Britain's Experience in the Exchange Rate Mechanism. IEA Occasional Paper No. 135, Available at SSRN: https://ssrn.com/abstract=734203 or http://dx.doi.org/10.2139/ssrn.734203

Alan Budd (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
883
Abstract Views
3,416
rank
32,668
PlumX Metrics