POLI 243 Lecture 13: Lecture 13
12 Sep 2018
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Document Summary
The politics of international monetary relations - the exchange rate and domestic politics. hard money vs. soft: creditors vs. debtors. Soft money - a currency that is not so desirable. Creditors are people who have capital, and asset that they are earning some of. Debtors are people who are borrowing the money, collect the debts and owe. When the interest rate goes up, bad on the debtors and good on the creditors their income off of, investments and a rate of return for them money back and have to pay interest on the debt. Effect on trade competitiveness: tradeables vs. non-tradeables Tradeable: goods and services that are competing in trade and exports (textiles, either can be engaged in exports or not) Non-tradeable: services (hairdressers, people stay local for the service) If you are engaged on production of a tradeable good, you are thinking about foreign competition and when the exchange rate goes up or down, you are effected.
