CHAPTER 8: THE POLITICS OF INTERNATIONAL MONETARY RELATIONS

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4 Apr 2012
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CHAPTER 8: THE POLITICS OF INTERNATIONAL MONETARY
RELATIONS
Scammel: Successful International Monetary System
Need for a medium of exchange
Adequate ties between nation’s financial institutions
Method for balance of payments
Management of the international monetary system
Exchange Rates: Fixed vs. floating
The price for money is established in interest rates
If there is a lot of currency price will fall
The size and nature of a country’s economy shapes the supply
of currency
Dirty Float: the government buying or selling its own currency
to drive up or down the price
Mundell Fleming Conditions
o Policies on exchanges
o Openness of the capital market
o Domestic monetary policy autonomy
Inflation makes imports look cheaper.
Adjustment through deflation usually means economic downfall.
Hegemonic Stability Theory and Monetary Regimes
In the absence of an overarching international political
authority, the collective goods which support liberal
international economic relations will only exist when a state
with the requisite capabilities decides to provide them
Realist: monetary regimes require some sort of management
by a hegemonic power, but also that regimes characteristics
and management will reflect the power of hegemonic theory
Liberals: primarily concerned with how well the regime
supports individuals abilities to conduct economic transactions
across international boundaries
Marxists see the monetary regimes as a way to enforce the
international division of labour
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