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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

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Listed author(s):
  • 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.
    • 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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    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. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    2. Matteo Maggiori, 2012. "Financial Intermediation, International Risk Sharing, and Reserve Currencies," 2012 Meeting Papers 146, Society for Economic Dynamics.
    3. 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, November.
    4. 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.
    5. Nicolas Magud & Carmen Reinhart & Kenneth Rogoff, 2005. "Capital Controls: Myth and Reality A Portfolio Balance Approach to Capital Controls," University of Oregon Economics Department Working Papers 2006-10, University of Oregon Economics Department.
    6. Edwin M. Truman, 2008. "On What Terms Is the IMF Worth Funding?," Working Paper Series WP08-11, Peterson Institute for International Economics.
    7. 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.
    8. 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.
    9. James M Boughton, 2011. "Jacques J. Polak and the Evolution of the International Monetary System," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(2), pages 379-399, June.
    10. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
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    Cited by:

    1. Landau, J.P., 2012. "Policies on sovereign debt," Financial Stability Review, Banque de France, issue 16, pages 191-201, April.
    2. 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.
    3. 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.

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