In November 1968, large inflows of foreign currency into the Bundesbank prompted Germany to enact a "pseudo - revaluation" with a special tax on exports and tax allowance on imports.

Source: German Monetary History in the Second Half of the Twentieth Century, pg 44.

Could anyone explain why the mark finally revalued? What was the mechanism?

  • 1
    $\begingroup$ I'm voting to close this question as off-topic because it is better suited for Economics Stack Exchange. (Actually I would like to vote to move it there but can't select this option.) $\endgroup$
    – LocalVolatility
    Jan 10, 2017 at 14:30
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    $\begingroup$ Pseudo-revaluation is a strange and stupid phrase (or pseudo phrase). Author means that they could not revalue under the agreed upon rules of the fixed exch B.W. system, so they tried to reduce the current account w/ taxes/subsidies in this manner as a substitute. But you can't stop economic market forces in an intl open world econ and eventually DEM appreciated after the Smiths. agreement of 1971 and more so in the de facto floating rate regime that followed in 1973. Once exch rates were freed the market took over. Mechanism was break down of fixed FX system bc tax/subsidi didn;t work. $\endgroup$
    – noob2
    Jan 10, 2017 at 16:30


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