§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what was the effect on the exchange rate against (a) the United States dollar (b) other currencies and (c) overall after three years of his simulation on the Treasury model of the effect of a reduction in real wages on employment; and if he will publish in the Offical Report a table showing what is the effect on employment of such a change in the absence of a reduction in real wages but assuming an accommodating monetary policy.
§ Mr. Peter ReesThe effect on the sterling index in simulations of lower real wages under various assumptions about fiscal and monetary policy is shown in tables A to D of annex B of the recent paper by Treasury officials on "The Relationship between Employment and Wages". The simulations assume implicitly that the proportionate changes in sterling are the same against all currencies. It would be misleading to consider the effects of changes in the exchange rate on output and employment in isolation from the factors which brought the change about.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer whether the Treasury model of the economy incorporates the findings in Treasury Working paper no. 2 by Messrs Odling-Smee and Hartly concerning the effect of exchange rate changes; and if he will publish in the Official Report a statement showing how the predicted changes since 1980 have been realised in practice.
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Overtime Provision Ministerial responsibilities and departments Financial Year 1981–82 1982–83 1983–84 1984–85 £000 £000 £000 £000 Agriculture, Fisheries and Food Ministry of Agriculture, Fisheries and Food 1,683 2,042 1,979 1,721 Intervention Board for Agricultural Produce 11 21 16 25 Chancellor of the Exchequer Treasury (including Civil Service Catering Organisation) 602 660 722 809 Customs and Excise 17,210 17,465 19,123 20,157 Central Office of Information 206 176 205 240 Government Actuary — — — — Inland Revenue 1,424 1,790 2,007 4,213 Department for National Savings 546 745 1,765 905 National Investment and Loans Office — — — 2
§ Mr. Peter ReesThe effects of exchange rate changes in the current version of the Treasury model differ from those reported in Treasury working paper No. 2. The most recent results of simulations of the effect of an exchange rate change were published in HM Treasury Macroeconomic Model Technical Manual Supplement 1984 (J. Barber ed.). Results of simulation cannot be compared to outturn: those factors assumed fixed in simulation will in practice vary.