Exchange Rate and Monetary Policy. On "Hans Seidel, Economy and Economic Policy in the Kreisky Era"

In contrast to structural policy, the monetary and exchange rate policy of the Kreisky era was innovative, as Hans Seidel explains in his posthumously published book "Wirtschaft und Wirtschaftspolitik in der Kreisky-Ära" (Economy and Economic Policy in the Kreisky Era). Monetary policy, which had previously been primarily domestic in orientation due to the post-war weakness of the credit system and the lack of liberalisation, had to react to the challenges of foreign trade and recognise its limits. The inflation spurt of the oil price crises was successfully countered with income policies. The gradual transition from exchange rate policy to hard currency policy meant a reversal of causality: the exchange rate was not intended to bring about a price stability determined by the domestic economy, but to provide a stability rate for domestic economic policy; relative price stability was no longer achieved by the social partners being reasonable, but by setting them a credible barrier.