Explaining Choices About Money-11-5-07

Explaining Choices About Money-11-5-07 - Explaining Choices...

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Explaining Choices About Money (I) Monetary Cooperation is Hard!- monetary cooperation is both important to states and very difficult between them, problems over money is particularly challenging even in context of other international problems for cooperation. Three reasons why its hard: a. Complexity- money stuff is very complex, more complex than international trade, unique challenges that are posed to cooperation. States might disagree over the rules of the game, boils down to what you’re going to agree upon. Small open economies may place emphasis on exchange stability as opposed to large regimes which place preference on nature of escape clause. States may have technical disagreements; what rules and policies are most efficient? Just getting to the table is relatively hard, but complexity is small potatoes compared to >>>>>>>> b. The Crucial Adjustment Problem- monetary cooperation involves abdication of national macroeconomic autonomy, giving up the government your ability to control monetary policy, linking the domestic and international spheres. If you want to control inflation rate, you lose ability to control interest rates, everyone gains from monetary cooperation but to get it sometimes governments must take part in unpleasant acts in sometimes the worst possible times. c.
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This note was uploaded on 02/19/2008 for the course AEM 3230 taught by Professor Little,j.e. during the Spring '08 term at Cornell.

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Explaining Choices About Money-11-5-07 - Explaining Choices...

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