Modeling Stabilization Policy for the LDCs in an International Setting and Discussion

countries and hence in the world as a whole. Thus, a rapid increase in Japanese exports and tl~eir concentration to certain countries might well have been the cause of difficulties in adjustment~. In the past few years, however, there has been a substantial improvement in the international adjustment mechanism. The flexible exchange rate system, which has not yet teen fully acknowledged, will prevent cumulative disequilibrium and enable the world economy to share the fruits of rapid economic growth.