The crisis and beyond: Prospects for international economic cooperation

Governmen

Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration

For more than thirty years, until the completion of Economic and Monetary Union (EMU), the member states of the European Union (EU) attempted to fix regional exchange rates. Naturally enough, most explanations of this process emphasize its monetary sources and effects. Some focus on how creating a multinational currency area might increase the efficacy of monetary policy. Others stress how fixing a national currency to a low-inflation monetary anchor, or adopting a single low inflation currency, might enhance the anti-inflationary credibility of national monetary policies. In these views, European monetary integration was motivated by the belief that, by themselves, national monetary authorities would be unable or unwilling to pursue appropriate monetary policies.Governmen

Global Trade in the Aftermath of the Global Crisis

Re-balancing global trade will be difficult, generating substantial protectionist pressures. To manage these pressures, governments must maintain domestic political support for an open world economy. This in turn requires flexible responses to national political pressures. Rigid, unrealistic insistence on exemplary behaviour will be less fruitful than efforts at modest, feasible cooperation on trade policies. Above all, governments singly and jointly need to address the underlying macroeconomic causes of the imbalances to prevent serious trade confrontations.Governmen

Global Governance of Global Monetary Relations: Rationale and Feasibility

Is there a valid argument for international cooperation, and some form of international governance structure, in the international monetary realm? On the purely economic front, the argument is not strong. Yet a broader political economy approach concludes that national currency policy can in fact impose non-pecuniary externalities on partner nations. This is especially the case with major policy-driven misalignments, which cannot easily be countered by other governments. For example, one country’s substantially depreciated currency can provoke powerful protectionist pressures in its trading partners, so that exchange rate policy spills over into trade policy in potentially damaging ways. Inasmuch as one government’s policies create these sorts of costs for other countries, and for the world economy as a whole, there is a case for global governance. This might include some institutionalized mechanism to monitor and publicize substantial currency misalignments. While there appears to be little global political attention to such a mechanism now, there have been initiatives along these lines at the regional level, and the current crisis may have stimulated more general stirrings of interest.Governmen

When and Why Did Government Become an Enemy of the People?

Governmen

The Political Economy of Exchange Rate Policy in Latin America: An Analytical Overview

Exchange rates have been central to the course of economic development in Latin America for decades. From the heyday of import substitution in the 1960s to the rapid expansion of foreign debt in the 1970s, from the debt crisis and its troubled aftermath in the 1980s to the rekindling of growth and borrowing in the 1990s, the exchange rate has been crucial to the mix of government policies that has shaped the region. Indeed, many analysts regard exchange rate policy as a major determinant of other economic outcomes, such as adjustment to the oil shocks of the 1970s and the debt crisis of the 1980s (Sachs, 1985). And currency policies have themselves been at the center of some of the regions most prominent economic processes and events, such as liberalizing reforms in the Southern Cone between 1976 and 1982, the Mexican crises of 1982 and 1994, Argentinas adoption of a currency board in 1991, Brazils 1999 currency crisis, and ongoing discussions of dollarization.

Toward a Political Economy of Takings

In this Essay, I offer the musings of one whose own work is of political economy and an area of political economy far removed from the issues typically raised by takings

Politics and Exchange Rates: A Cross-Country Approach to Latin America

This paper explores the impact of political economy factors on exchange rate policy in Latin America. It studies the determinants of the choice of exchange rate regime in Latin America, placing special emphasis on political, institutional and interest group explanations. The presumption is that differences in institutional and political settings, as well as differences in economic structure, can have an effect on the choice of regime and, more generally, on exchange rate policy. In addition to these structural elements, the paper examines whether such political events as elections and changes in government affect the pattern of nominal and real exchange rates.