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The International Monetary System: Living with Asymmetry

In: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century

  • Maurice Obstfeld

This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies.

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This chapter was published in:
  • Robert C. Feenstra & Alan M. Taylor, 2013. "Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century," NBER Books, National Bureau of Economic Research, Inc, number feen11-1, December.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12596.
    Handle: RePEc:nbr:nberch:12596
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Reinhart, Carmen & Calvo, Guillermo, 2002. "Fear of floating," MPRA Paper 14000, University Library of Munich, Germany.
    2. Hall, Stephen G. & Tavlas, George, 2012. "The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature," School of Economics Working Paper Series 2012-1, LeBow College of Business, Drexel University.
    3. Magud, Nicolas & Reinhart, Carmen & Rogoff, Kenneth, 2011. "Capital Controls: A Meta-analysis Approach," MPRA Paper 30274, University Library of Munich, Germany.
    4. Matteo Maggiori, 2012. "Financial Intermediation, International Risk Sharing, and Reserve Currencies," 2012 Meeting Papers 146, Society for Economic Dynamics.
    5. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
    6. Aaron Brown, 2011. "Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, by Barry Eichengreen," Quantitative Finance, Taylor & Francis Journals, vol. 11(6), pages 825-826.
    7. C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15.
    8. Edwin M. Truman, 2008. "On What Terms Is the IMF Worth Funding?," Working Paper Series WP08-11, Peterson Institute for International Economics.
    9. Murray C. Kemp, 1962. "Foreign Investment And The National Advantage," The Economic Record, The Economic Society of Australia, vol. 38(81), pages 56-62, 03.
    10. James M Boughton, 2011. "Jacques J. Polak and the Evolution of the International Monetary System," IMF Economic Review, Palgrave Macmillan, vol. 59(2), pages 379-399, June.
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