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Hegemonic Stability Theories of the International Monetary System

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  • Eichengreen, Barry

Abstract

Specialists in international relations have argued that international regimes operate smoothly and exhibit stability only when dominated by a single, exceptionally powerful national economy. In particular, this "theory of hegemonic stability" has been applied to the international monetary system. The maintenance of the Bretton Woods System for a quarter of a century up to 1972 is ascribed to the singular power of the United States in the postwar world, while the persistence of the classical gold standard is similarly ascribed to Britain's dominance of 19th-century financial markets. In contrast, the instability of the interwar gold-exchange standard is attributed to the absence of a hegemonic power. This paper assesses the applicability of hegemonic stability theory to international monetary relations, approaching the question from both theoretical and empirical vantage points. Theory is of some help in understanding the relatively smooth operation of the classical gold standard and the early Bretton Woods System as well as some of the difficulties of the interwar years. Much of the evidence, however, proves to be difficult to reconcile with the hegemonic stability interpretation.

Suggested Citation

  • Eichengreen, Barry, 1987. "Hegemonic Stability Theories of the International Monetary System," CEPR Discussion Papers 193, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:193
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    References listed on IDEAS

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    8. Lipson, Charles, 1982. "The transformation of trade: the sources and effects of regime change," International Organization, Cambridge University Press, vol. 36(02), pages 417-455, March.
    9. Cohen, Benjamin J., 1982. "Balance-of-payments financing: evolution of a regime," International Organization, Cambridge University Press, vol. 36(02), pages 457-478, March.
    10. Cowhey, Peter F. & Long, Edward, 1983. "Testing theories of regime change: hegemonic decline or surplus capacity?," International Organization, Cambridge University Press, vol. 37(02), pages 157-188, March.
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    Cited by:

    1. Kathryn M.E. Dominguez, 1993. "The Role of International Organizations in the Bretton Woods System," NBER Chapters,in: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, pages 357-404 National Bureau of Economic Research, Inc.
    2. Agnès Bénassy-Quéré & Yeganeh Forouheshfar, 2013. "The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate," Working Papers hal-00961708, HAL.
    3. Lin, Justin Yifu & Fardoust, Shahrokh & Rosenblatt, David, 2012. "Reform of the international monetary system : a jagged history and uncertain prospects," Policy Research Working Paper Series 6070, The World Bank.
    4. Eichengreen, Barry, 1993. "The Endogeneity of Exchange Rate Regimes," CEPR Discussion Papers 812, C.E.P.R. Discussion Papers.
    5. Agnès Bénassy-Quéré & Yeganeh Forouheshfar, 2013. "The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate," PSE - G-MOND WORKING PAPERS hal-00961708, HAL.
    6. Hartmann, Philipp & Issing, Otmar, 2002. "The international role of the euro," Journal of Policy Modeling, Elsevier, vol. 24(4), pages 315-345, July.
    7. Agnès Bénassy-Quéré & Jean Pisani-Ferry, 2011. "Quel système monétaire international pour une économie mondiale en mutation rapide ?," Working Papers 2011-04, CEPII research center.
    8. Michael D. Bordo & Finn E. Kydland, 1990. "The Gold Standard as a Rule," NBER Working Papers 3367, National Bureau of Economic Research, Inc.
    9. Charles Wyplosz, 1997. "EMU: Why and How It Might Happen," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 3-21, Fall.
    10. Bénassy-Quéré, Agnès & Forouheshfar, Yeganeh, 2015. "The impact of yuan internationalization on the stability of the international monetary system," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 115-135.
    11. Agnes Benassy-Quere & Jean Pisani-Ferry, 2011. "What International Monetary System for a Fast-Changing World Economy?," Book Chapters,in: Jack T. Boorman & André Icard (ed.), Reform of the International Monetary System: The Palais Royal Initiative, chapter 21, pages 255-298 Emerging Markets Forum.
    12. Deborah Mabbett & Waltraud Schelkle, 2015. "What difference does Euro membership make to stabilization? The political economy of international monetary systems revisited," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 508-534, June.
    13. Sergey Narkevich & Pavel Trunin, 2012. "Reserve Currencies: Factors of Evolution and their Role in the World Economy," Research Paper Series, Gaidar Institute for Economic Policy, issue 162P.
    14. Peter Mooslechner & Martin Schuerz, 1999. "International Macroeconomic Policy Coordination: Any Lessons for EMU? A Selective Survey of the Literature," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(3), pages 171-199, September.
    15. Devereux, Michael B. & Shi, Kang & Xu, Juanyi, 2007. "Global monetary policy under a dollar standard," Journal of International Economics, Elsevier, vol. 71(1), pages 113-132, March.
    16. Pietro Alessandrini & Michele Fratianni, 2009. "Resurrecting Keynes to Stabilize the International Monetary System," Open Economies Review, Springer, vol. 20(3), pages 339-358, July.
    17. repec:ers:journl:v:xx:y:2017:i:3b:p:269-279 is not listed on IDEAS
    18. P. Gray, 1996. "The ongoing weakening of the international financial system," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 49(197), pages 165-186.
    19. P. Gray, 1996. "The ongoing weakening of the international financial system," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 49(197), pages 165-186.

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