POLSCI 2J03 Lecture Notes - Comparative Advantage, Protectionism, U.S. Route 74
13 Feb 2014
School
Department
Course
Professor
Document Summary
Global financial system: bretton woods, ims, credit system. Applicable to both the ims and the credit system: 1980s debt crisis. It refers to the action of president nixon, where he decided to unilaterally end the fixed exchange rate. Why was there a unilateral move to change the way the international system worked. United states was loosing compared to japan. Europe and japan fixed and pegged to the american dollar (reflecting the weakness of their economies and fixed at a low rate against the dollar), it was easier for them to export items into the united states. Low exchange rate from europe and japan gave them a comparative advantage. In response to this nixon changing the global system (demonstration of american power); we are no longer participating in this fixed exchange rate, going to let the value be determined by the relative strength of their economies. It was going to be determined by supply and demand.
