148. Exchange rate poricies that eill be in effect in the future (or, arternativelybut eouivalehtly, the policies which affec! exchange rates) are nucb rflore dlfficultto Predict. rn nany nedium-cerm foreca.ts, minor adjustrnent.g, such as the recoveryof the pound sterllng, appear Co be widely expected. The dominat.ing auestion,ho,ever, is the fate of the united states dollar on which debate is ranpant and aconsensus seeras inposslble to obtain. rn accordance onith Ehe LrNx rnodel, theI'ong-tern acenarioa aasune a generarized appreciation of nost currencles withrespect to the doll€r on che order of 15 pei cent apread over the nerit two years.Excepti6ns are nade for councries traditionaly pegged to sone currency or basket ofcurrencLes and for other countrie' wlth very high inflation rates relati.ve to thenorld. This is a conservacive assultrptton. After 19g7, exchange ratb movenenrs aredeternined by relative inflation rate€ - purchasing povrer parity as applied totraded goods. fn the long-term scenarios, therefore, relatlve priceconpetitieeness do€s not appreciably affect export perfornance. 149. rhe GEU model depends on t$o naib assurnptions! the investment effort asneaaured by the share of tnvestnent in GDp and the effectiveness of capital asmeaaured by the incremental capital_output ratlo (JCOR). For aII countrles, theA/40/5r9 English Page 73 investnent share lrag set at the rate observed on average over the Period 1974-1985. On the other hand, the lcoRs for developed countries were assuned to revert gradually to long-tern norms, the 1965-1985 average, nhile for develoPing countries the gradual change nas torra rd an apProxlnate midpoint between Ehe nole favourable 1965-t973 values and the less fa\rourable 1974-1985 values' r5o. Both assunpErons rest in part on the fact chat the nost important world-slde structural break observed during Che last 25 years is surely that ttetween l9?3 and Lg74. The large transfer of eealth from oil-consuming to oil-produclng countries had broad lmplications. capacity, which.depended on continued unrealistlcally inexpensive energy, was made econonically obsolete virtualty overnight.. rnflationr which had already accelerated moderately, exploded. Governments turned !o the need to combat inflation, even while trying to prevent the real conseouences of the transfer of erealth, Ultimately Policy lrade-offs seemed to have been resoLved in favour of austerity even at the cost of lost outPut and,/or unPrecedented unemploynent, rrhich perslsts in Eu roPe unlil Bhls day. If the period prior to 1973 (or perbaps I97t trith susPension of convertabllity) was relatively ca1m, Ehe
**Analysis**
This text appears to be discussing macroeconomic policies and their impact on exchange rates, inflation, and economic growth. It mentions specific economic indicators such as GDP, investment, and inflation rates, which suggests that the text is focused on economic development and international trade. Additionally, the text refers to a specific economic model (the GEU model) and mentions the impact of the 1973 oil crisis on the global economy, which further supports the categorization.

**Category**
Economic development, International trade