Volcker Urges Cooperation to Fuel Recovery

Federal Reserve Chairman Paul A. Volcker said today that it is essential for the United States and other countries to join in a cooperative effort to keep the worldwide recovery alive.

Volcker said that some policy coordination between the major industrialized countries has already been achieved but that greater efforts are needed drawing on a range of economic policy instruments.

Volcker’s comments before the Senate Banking Committee came amid reports that he and Treasury Secretary James A. Baker III will meet with their counterparts from four other nations in Paris over the weekend in a bid to stabilize the dollar. (Story on Page 10.)

The Reagan Administration has been standing by as the dollar has fallen for the last two years, while Japan and West Germany have been urging the United States to stop talking the dollar down.

Internal Demand

But Baker has said Japan and West Germany should do more to stimulate internal demand rather than rely on exports to the United States to bolster their economic growth.

Volcker alluded to these warnings in his testimony today when he said, “In the absence of stronger domestic growth, pressures will intensify for more appreciation of their currencies, undercutting further their own economic prospects.”

Volcker said any coordinated policy does not depend so much on precise timing but rather on a willingness by all countries to pursue mutually agreeable goals.

Volcker said this effort would require “an unusual combination of discipline, patience and international cooperation. However, given the stakes not just for the United States but for others, I don’t think there is any real choice.”

Volcker’s comments came as the Fed chairman presented the central bank’s monetary targets for 1987 and projections for economic growth.