IDST 3100Y Lecture Notes - Lecture 5: Collective Action, Second Opium War, Exchange Rate
3 Mar 2016
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Currency devaluation: sell more domestically produced products while buying less foreign produce products. Oil price increases (if you are depended on oil but have to import) Recession in us, negative effect on imports of southern countries. Cleine 85% of increase of debt of non-oil producing exporting producers in the south, between 1973-1982, is attributable to these factors above . Curved behaviors and panic as hot money flows to the. High risk (lacking power to determine certain market results) Northern banks in 1970s and early 80s over lending. Petrol dollars at the same time in us banks. People not willing to borrow, or only at very low rates. Response of recession and high levels of inflation. Head of federal reserve increases interest rates drastically. Private banks refuse to lend to indebted nations. Capital became scarce in turn causing the imf to gain power and interest. Imf became only institution with the funds to supply to developing areas.
