Textbook Notes (368,317)
Canada (161,798)
POLI 243 (70)
Chapter 23

Political Science Chapter 23 Summary.docx

2 Pages
133 Views
Unlock Document

Department
Political Science
Course
POLI 243
Professor
Mark Brawley
Semester
Winter

Description
Political Science Chapter 23 Summary Japan, International Monetary Responsibilities, and Policy Coordination: The Louvre and Plaza Accords US Monetary Policy in the 1980s - US monetary policies were full of leadership but were acting irresponsibly - Their policies to resolve their own problems had serious repercussions for other countries - Country shifted net international debtor - Trade balance went into large deficit largely due to dollar’s overvaluation Responding to Dollar Over-liquidity Again - The US experienced high inflation which was fought with high interest rates - Positive US economic performance was financed by foreign capital - Reagan pushed other countries to liberalize capital markets—attention was paid to Japan - The net agreement was to encourage the flow of foreign funds to the US - Everyone in the US blamed the high dollar for the growing trade imbalance - Their main goal was to cut inflation regardless repercussion to the dollar’s international value, trade balance, growth or employment Coordinating to Bring the Dollar Down - Once it decided to take action on exchange rate, it had to abandon its earlier position of unilateral inaction in terms of the exchange markets and to seek to establish a policy based on multilateralism - The Fed wanted to ease monetary policy and get the value of the dollar down, without setting dollar’s market value into downward spiral - Bureaucratic politics don’t seem to be a major force in the sense that each side agreed on goals but there’s a debate of the degree of coordination of their activities; Treasury acted to push dollar down while occasionally using Fed’s policies to put the brakes on The Plaza Accord: Japan’s Rising Role in Monetary Affairs - US was asked to lower its budget deficit by reducing spending, while other powers would increase their spending, thereby accepting a low rate of inflation - Aim was to bring exchange rates of the dollar, yen and deutschmark back to reasonable terms - Plaza accord ushered in period of coordination among major powers - b/c each country was worried about their own trade balances, each would up not going as far as they could and accusing others of doing too little The Louvre Accord - The G5 plus Canada agreed to stabilize values of the dollar, yen and deutschmark - US couldn’t reach domestic consensus on how much to reduce budget deficit and other countries were feeling reluctant except of Japan who instituted expansionary monetary policy - Dollar stabilized and began to appreciate leading to need for renegotiating the dollar-yen exchange rate - Monetary policies were aimed at stimulating economy, while pressur
More Less

Related notes for POLI 243

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit