Exchange rate structure and price levels in Italy

Abstract

The article examines, within the framework of general foreign exchange policy, the different exchange rates for the lira, their reciprocal variations and their variations in regard to theoretical purchasing power parities, their disturbing influence on price levels and the resulting reactions (windfall profits, maladjustments between costs and prices, abnormal distortion of trade channels, etc.). This analysis covers the conversion rates of the lira for Government purchases and foreign grants, rates for private barter and reciprocity deals and for trade under the “franco valuta” system and under clearing agreements, as well as the exchange rates for freely negotiable foreign currencies. The importance of the measures taken in November 1947 to unify foreign exchange rates is stressed and statistically illustrated as part of the arduous task of general economic readjustment in Italy.

JEL: F31, E31