International Politics Week 10
International Politics Week 10 PSC 1003
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This 3 page Class Notes was uploaded by Jaimee Kidd on Monday April 25, 2016. The Class Notes belongs to PSC 1003 at George Washington University taught by Talmadge in Spring 2016. Since its upload, it has received 11 views. For similar materials see Introduction to International Politics in Political Science at George Washington University.
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Date Created: 04/25/16
International Trade and Finance After 1945 The Bretton Woods System: Its Origins and Evolution Exchange Rates Trade Reconstruction and Development Bretton Woods Conference 1944 need new monetary system o Acceptance of Keynesianism Active fiscal and monetary policy to stabilize the economy Fiscal spending Monetary interest rates Manage exchange rates but avoid recessions Keynes’ Critique o PSF doesn’t work Price Species Flow Mechanism Doesn’t actually restore equilibrium Wages are “sticky”; don’t automatically adjust at will o Recession, a vicious circle Unemployment oversave, underspend depression o Arguing that there has to be a role for the government to intervene to avoid this cycle Countercyclical policies (spending) stimulate demand Trying to find a medium between totally fixed exchange rates and PSF The International Monetary Fund o Adjustable peg exchange rate system Avoid wild fluctuation o Exchange rates are set to fixed values BUT can adjust if there is a “fundamental disequilibrium” o In practice Dollar as reserve currency, replaces gold Other currencies fixed to the dollar Not that adjustable…have to reach consensus if you actually have reason o Access to financing for countries experiencing payments deficit Support currency without recession o Regulation of capital flows across border o Collective management, frequent consultation of world economy Not quite as democratic as some countries would have liked Decision making power is a function of the funds you give to IMF—gives US outsized role and exclusive veto act Move to Floating Exchange Rates, 1973 o Late 1960s: Us payments deficits o 19711973: US resists adjustment o 1973 system of fixed exchange rate ends Reconstruction and Development in Bretton Woods o The World Bank Loans for reconstruction and development Funds inadequate; Marshall plan steps in Trade in Bretton Woods o General Agreement on Tariffs & Trade Default institution… Key Principles, 1947 Liberalization o Notion that states should agree to gradual removal of trade barriers Nondiscrimination o All states involved/agree Reciprocity o Tit for tat Safeguards o Protection against unfair trade practices Negotiation Rounds Reduced tariffs manufactured goods 1955: World Trade Organization Limits of free trade Agriculture excluded Late 1960s: New US, European demands for protectionism Nontariff barriers to trade Explaining Post War o International: US Leadership USA: economic hegemon Soviet threat: key motivation Timing evidence? 1970s confirms 1980s puzzling After Cold War? o International: Institutionalized Cooperation Bretton Woods: liberal regime, institutions rules, coordination, solve CAD Regimes can… Raise the costs of cheating lower costs of bargaining provide information Hegemonic leadership jumpstarts but BW then survives without it o Domestic: US ProTrade Coalitions The lessons of history argument Key change came after the war Robust internationalism among US industry and agriculture (and banks)
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