PSCI 4356 Lecture 6: IMF
11 May 2017
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Monday, march 27, 2017 8:34 am: balance of payments. More of an accounting system, just trying to make sense of capital/trade flows. Current account: amount and direction of imports/exports, trade balance, net investment from abroad, worker remittances, foreign aid. Historically very linked, current and capital accounts negatively correlated. Never completely works out to zero between the current and capital, but they should. Bop is a theory of foreign economics. States cannot simultaneously have: autonomous monetary policy, fixed exchange rate, capital mobility, mundell-fleming conditions, classical gold standard. Uk adopted a fixed gold currency in 1717, but standard emerged after napoleonic wars (1815) Rule 1: fixed exchange rates commit central banks to buy/sell gold without limitation. Rule 2: people and firms have freedom to import/export as much gold as they want. Two main plans: keynes - british plan, white - us plan.
