Term
| Eichengreen: Globalizing Capital |
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Definition
Explain GS: Realism
open markets and british hegemony allowed GS to be popular, pathway dependency and network externalities influences this choice. |
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Term
| Strange: Politics of international currencies |
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Definition
Explain GS: realism
benefits to having a key currency include seignorage, prestige, balance of payments adjustment, leverage, control...etc. |
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Term
| Cohen: currency and state power |
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Definition
explaining GS: realism
benefits of having a key currency, usually the hegemon. balance of payments, seignorage, prestige, leverage...etc. |
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Term
| Bordo: Gold Standard, the traditional approach |
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Definition
explaining GS: lib./constructivism
people accepted this standard and used it widely because gold was relatively the same price everywhere, so it made transactions cheaper and increased trade. |
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Term
| Frieden: Rise, reign and demise of the classical gold standard |
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Definition
explaining GS: realism/Analib
R: london was a financial sector doing well, people wanted a piece of the pie
AL: forced upon the government by bank and powerful financial sector. |
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Term
| Eichengreen: sterling 1931 |
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Definition
fall of GS: realism
fall of GS due to floating of sterling caused by external shocks to a weak government. |
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Term
| Krasner and Brawley: Afterglow |
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Definition
fall of GS: realism
lack of hegemony of britain led to them attempting to maintain because of afterglow and US refusal to dominate. UK wanted benefits of key currency - didn't have the power. |
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Term
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Definition
fall of GS: analytical liberalism
lack of hegemony means no decisions made can be attributed to power. Realism cannot explain variation in policy to bad systemic conditions. because of SUFFRAGE new interests were represented, one against GS |
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Term
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Definition
fall of GS: analytical liberalism
engaged in predatory devaluations to appeas domestic groups (smoot-hawley) |
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Term
| Obtsfeld: Trilemma and the interwar period |
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Definition
fall of GS: analib
emergence of trilemma, states chose autonomy because of suffrage |
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Term
| Krasner and Lake: stability |
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Definition
Bretton woods: realism
hegemon = stability |
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Term
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Definition
bretton woods:
realism: systemic (econ - balance of payment, poli - war) systemic conditions for crisis
analib - no - no one really lobbied
bureau - yes
indiv - conally, kissinger and nixon & Volcker group |
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Term
| Gowa: Explaing closing the gold window |
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Definition
bretton woods: constructivism
individuals played the largest role |
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Term
| Kahler: Explaining 1980s crisis |
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Definition
key players: banks, national governments, IMF, Debtors
cooperation: VERY HIGH, no hegemonic stability
coalitions: north and south
Euromarkets: unregulated |
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Term
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Definition
Euromerkets, petrodollars
Credit syndication: linked banks
focus on rescheduling |
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Term
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Definition
| involuntary lending to get their money back focus on rescheduling |
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Term
| Bird and Rowlands: catalytic effect |
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Definition
At best modest, why invest in country approaching IMF?
MORAL HAZARD |
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Term
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Definition
conditionality form developed to developing with changing clientele.
asymmetrical actors =/= symmetrical contracts
silent revolution: Washington consensus
too much fiscal, not enough exchange rate focus in IMF
convergence of interests IMF and domestic officials |
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Term
| Broz and Hawes: congressional politics |
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Definition
| money-centre banks/skilled labour like it - PUBLIC GOOD stability |
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Term
| Broz and Blomberg: PE of IMF voting |
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Definition
Quota system: more you pay, more votes - formula questioned
Rich countries need more control or they won't contribute. Current quota system actually serves to reduce inequality. |
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Term
| Copelovitch: Private debt composition |
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Definition
IMF staff, FI and larger countries determine who gets sweet deals
Will lend in accordance to bank exposure because banks failing is bad: domestic instability, financial intermediary and provider of domestic credit. |
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Term
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Definition
| self fulfilling (optimism/pessimism), herding (bandwagoning), contagion, market manipulation (mexico). |
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Term
| Reinhart : notes on contagion |
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Definition
Knowing there is a crisis elsewhere significantly increases the likelihood of a domestic crisis it is caused by financial sector linkages
intra-regional trade important but canot explain mexico/argentina. |
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Term
| DeLong: meltdown and moral hazard |
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Definition
Mexico: tesebonos, Clinton wanted Mexico stable, NAFTA and immigration. DOMESTIC INTERESTS, why they didn't take swift action in asia.
lesson: large scale foreign borrowing renders exchange rate futile in stabilization. |
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Term
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Definition
Needs an LLR - bankruptcy court, NOT IMF
Value of assets depend on market expectations, which determine the value of assets.
It should be a coordinator of funds from the private capital markets rather than lending its own money. |
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Term
| Obstfeld: Financial Stability, Trilemma and International Reserves |
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Definition
| reserve accumulation maages instability and exchange rates. Without it banks: no regulation, gamble it, bride people to overlook bad spending. Reserves is how Taiwan avoided 1990s. |
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Term
| Dornbusch: After asia - vulnerability |
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Definition
without vulnerability, crises are unlikely.
1) borrow short term, invest long term, borrow in foreign currency, buying fluctuating assets, national credit risk, lumping (contagion).
risk management is NECESSARY |
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Term
| Eichengreen and Friden: PE of EMU |
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Definition
both political and economic.
Economic: transaction costs, interest rate convergence, financial market.
political: negotiation, symbolism, ratification.
1973 snake, 1979 E- 1987 MS/ERM, 1986 single european act, 1988: delors commission, 1992 unification trouble, 1994 sorted.
optimum gain area: costs high, not economically justified only good for a common market.
intergovernmentalism: coercion, linking issues |
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Term
| Friden: winners and losers |
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Definition
Mundell: not economically worth it, but critique: only looks at social welfare, not long term benefits.
3 political factors: anti-inflation cred, integration (no second class) business pushed for it
low inflation versus employment. strong or weak? city versus country?
not geopolitical |
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Term
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Definition
| bipolarity hypothesis: must have hard peg monetary union, or floats. no in between. |
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Term
| Obstfeld: america is the worlds problem |
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Definition
soft landing and the new benign neglect: global capital markets are forgiving so USD can adjust slowly.
Critique: relies on unintegrated goods market, not highly integrated asset market. If US changes spending, will have significant effect on currency, up to 20% depreciation. |
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Term
| Henning: Exchange rate weapon |
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Definition
exchange rate weapon: instrument of leverage in statecraft and explains state behaviour. can DELAY or DEFLECT transitional cost of adjustment. can be PASSIVE or ACTIVE. Asymmetry is assumed.
1977 - 1978 Locomotive theory: US wanted world economy stimulated, so threatened to devalue their currency so Japan and Germany provided the stimulus, engaged in inflation and eliminated their surpluses.
EU limits the use, possibly motivated by it? |
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Term
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Definition
third generation crises: currency depreciation set off by speculative attacks. this depresses investment and there is a de-leveraging cycle. capital mobility is a pre-req
Conclusion: 2006 crisis will be very long and difficult because it is an asset crisis, not a currency crisis. |
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