Global Imbalances and the Asian Economies: Implications for Regional Cooperation

This paper asks how Asia should prepare for the disorderly correction of global imbalances. It recommends tightening monetary policy and allowing Asian currencies to appreciate as a way of achieving a better balance between internal and external demand. Leaving the overall level of demand unchanged requires that this monetary tightening be complemented by some relaxation of fiscal policy. But because the scope for fiscal support of domestic demand differs across countries, so too does the optimal degree of monetary tightening and exchange rate adjustment. This observation makes clear that an attempt to suppress intra-Asian exchange rate movements would be counterproductive in this context. Other policy measures that produce effects over longer horizons that can further contribute to the rotation of demand away from exports to the US include the development of Asian financial markets and the completion of an Asian free trade area. These policy adjustments will occur most easily if they are coordinated within Asia.Asia economies; global imbalances; international economics; economic integration; regional cooperation

The Great Recession and the Great Depression: Reflections and Lessons

The Great Recession that started in 2008 has drawn constant comparisons with the Great Depression that unfolded in 1929. This paper documents how the response of policy makers in the current episode has been markedly different from the one observed in the 1920s and 1930s and to what extent this different behavior has followed the lessons from the historical analysis of the Great Depression. The historical account is also used to discuss probable changes to the world’s economic landscape regarding both trade and financial globalization.

Realistic and romantic reforms of the international financial system : reform of the international architecture

Internationaler Finanzmarkt, Internationales Währungssystem, Welt, International financial market, International monetary system, World

Sui Generis EMU

The thesis of this paper is that there is no historical precedent for Europe's monetary union (EMU). While it is possible to point to similar historical experiences, the most obvious of which were in the 19th century, occurred in Europe, and had “union†as part of their names, EMU differs from these earlier monetary unions. The closer one looks the more uncomfortable one becomes with the effort to draw parallels on the basis of historical experience. It is argued that efforts to draw parallels between EMU and monetary unions past are more likely to mislead than to offer useful insights. Where history is useful is not in drawing parallels but in pinpointing differences. It is useful for highlighting what is distinctive about EMU.EMU, Monetary union, Euro, Economic History, international monetary system, History of monetary unions, Eichengreen

International Policy Coordination: The Long View

This paper places current efforts at international economic policy coordination in historical perspective. It argues that successful cooperation is most likely in four sets of circumstances. First, when it centers on technical issues. Second, when cooperation is institutionalized – when procedures and precedents create presumptions about the appropriate conduct of policy and reduce the transactions costs of reaching an agreement. Third, when it is concerned with preserving an existing set of policies and behaviors (when it is concerned with preserving a policy regime). Fourth, when it occurs in the context of broad comity among nations. These points are elaborated through a review of 150 years of historical experience and then used to assess the scope for cooperative responses to the current economic crisis.