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Financing for development and the post Keynesian case for a new global reserve currency


  • David Hudson

    (Department of Political Science, School of Public Policy, University College London, London, UK)


In the context of the current financial crisis the article returns to the Keynes's plan for an international clearing house. In exploring the intellectual basis for Keynes's economics-namely uncertainty and liquidity preference-the article identifies the anti-developmental characteristics of US dollar-based international monetary system: (1) financial volatility and recurrent crises, (2) costly excessive international reserves, (3) the fundamental asymmetry of a system in which developing countries finance the US. Collectively these result in global deflationary tendencies which are caused less by a lack of liquidity than systemic inefficiencies. Keynes's plan for international monetary reform offers a solution to all of these problems. Copyright © 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • David Hudson, 2010. "Financing for development and the post Keynesian case for a new global reserve currency," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(6), pages 772-787.
  • Handle: RePEc:wly:jintdv:v:22:y:2010:i:6:p:772-787 DOI: 10.1002/jid.1724

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    References listed on IDEAS

    1. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-172, January.
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    5. Dani Rodrik & Andres Velasco, 1999. "Short-Term Capital Flows," NBER Working Papers 7364, National Bureau of Economic Research, Inc.
    6. Honohan, Patrick & Klingebiel, Daniela, 2000. "Controlling the fiscal costs of banking crises," Policy Research Working Paper Series 2441, The World Bank.
    7. Antonio Spilimbergo & Steve Symansky & Olivier Blanchard & Carlo Cottarelli, 2009. "Fiscal Policy For The Crisis," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(2), pages 26-32, July.
    8. Costabile, Lilia, 2009. "Current global imbalances and the Keynes Plan: A Keynesian approach for reforming the international monetary system," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 79-89, June.
    9. Fitzgibbons, Athol, 1988. "Keynes's Vision: A New Political Economy," OUP Catalogue, Oxford University Press, number 9780198286417, June.
    10. Graham Bird, 2010. "The SDR Aid Link: It's Now or Never," Development Policy Review, Overseas Development Institute, vol. 28(1), pages 63-74, January.
    11. Joshua Aizenman & Jaewoo Lee, 2005. "International Reserves; Precautionary vs. Mercantilist Views, Theory and Evidence," IMF Working Papers 05/198, International Monetary Fund.
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