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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

Author Info

  • Maurice Obstfeld

Abstract

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, September.
    • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12596.
    Handle: RePEc:nbr:nberch:12596
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    Other versions of this item:

    Find related papers by JEL classification:
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    1. Magud, Nicolas & Reinhart, Carmen & Rogoff, Kenneth, 2011. "Capital Controls: A Meta-analysis Approach," MPRA Paper 30274, University Library of Munich, Germany.
    2. Stephen G. Hall & George S. Tavlas, 2013. "The Debate About The Revived Bretton-Woods Regime: A Survey And Extension Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 27(2), pages 340-363, 04.
    3. Edwin M. Truman, 2008. "On What Terms Is the IMF Worth Funding?," Working Paper Series WP08-11, Peterson Institute for International Economics.
    4. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fear of Floating," NBER Working Papers 7993, National Bureau of Economic Research, Inc.
    5. Matteo Maggiori, 2012. "Financial Intermediation, International Risk Sharing, and Reserve Currencies," 2012 Meeting Papers 146, Society for Economic Dynamics.
    6. 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.
    7. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
    8. 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.
    9. 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.
    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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    Cited by:

    1. Philip R. Lane, 2013. "Growth And Adjustment Challenges For The Euro Area," The Economic and Social Review, Economic and Social Studies, vol. 44(2), pages 273-295.
    2. Filardo, Andrew J. & Siklos, Pierre L., 2013. "Prolonged reserves accumulation, credit booms, asset prices and monetary policy in Asia," BOFIT Discussion Papers 5/2013, Bank of Finland, Institute for Economies in Transition.
    3. repec:hhs:bofitp:2013_005 is not listed on IDEAS
    4. Alan M. Taylor, 2012. "Global Financial Stability and the Lessons of History: A Review of Carmen M. Reinhart and Kenneth S. Rogoff's This Time Is Different: Eight Centuries of Financial Folly," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 1092-1105, December.
    5. Landau, J.P., 2012. "Policies on sovereign debt," Financial Stability Review, Banque de France, issue 16, pages 191-201, April.

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