Publication Date


Document Type


First Advisor

Scaperlanda, Anthony E. (Anthony Edward), 1938-

Degree Name

M.A. (Master of Arts)

Legacy Department

Department of Economics


Currency question; Germany--Economic conditions


The primary stimulus to this study was a general lack of writing on both the theoretical aspects of currency appreciation and the actual appreciation of the Deutsch Mark in 1961. Economists have generally been more concerned with devaluation of currency. This is probably because public opinion and national policy makers are, as a rule, more responsive to a deficit in the foreign balance than to a surplus. To the uninformed, a surplus appears to be desirable since there is a vague implication that the nation in somehow accumulating something. In reality the nation is giving material goods to other nations in exchange for their promises to pay. Domestic consumption and investment are depressed, and the material benefits of the nation's production flow abroad. This aspect of a surplus is not usually considered, or at least not usually expressed. It was actually international concern over the flow of the reserves to Germany, and to a lesser degree German concern over domestic inflation, which caused German officials to appreciate the Deutsch Mark. In the theoretical discussion on currency revaluation it was found that the basic task lay in reconciling the two general approaches - the elasticities and absorption approaches - to the question revaluation. The point of controversy is the importance of the effects of changes in income to the final effects of a revaluation. When data of the 1961 appreciation are applied to the formulas of the two approaches, the later, 'improved' formula was found to give results which are less realistic than those of the earlier formula. This conclusion may, however, be due to the fact that the Deutsch Mark appreciation of 4.76 per cent was not stable enough to generate and/or redistribute income to the degree which is required by the later and supposedly more inclusive formula. The study is divided into six chapters. The first is the Introduction, Chapter Two describes the two theoretical approaches to the analysis of currency depreciation. It also describes the attempts at synthesis which have been made. The third and fourth chapters examine Germany before and after the appreciation. In these chapters both the conditions which created the need for appreciation, and its actual effects on the Germany economy are developed. Chapter Five adapts the theoretical tools developed in Chapter Two to the conditions of an upward revaluation. Therein the actual data of the 1961 Deutsch Mark appreciation are applied to the revived formulas. The final chapter presents a summary of the study and some of the major conclusions.


Includes bibliographical references (pages [146]-151)


viii, 151 pages




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