systemic conflict and regional monetary integration reading summary

Systemic conflict and regional monetary integration reading summary

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Henning, C. Randall, “Systemic Conflict and Monetary Integration in Europe” . I test the validity of the international thesis specifically with respect to Western Europe against four periods in which the United States acted to stabilize the international monetary system and against seven epi- sodes in which it disrupted the system. system. In this article I focus on the consequences of neglect or coercion on the part of the dominant state for policy choice within a semi-integrated region of smaller states. As the overall level of economic interdependence rises within Europe, culrency fluctuations cause increasing economic disruption and reduce the value of monetary autonomy. This leads to exchange rate stabilization and currency union.--> market intergration approach monetary union is necessary to prevent drastic shifts in competitiveness arising from exchange- rate changes and, by extension, erosion of political support for the single market. When goods markets are integrated, exchange rate stability more important than monetary independence by using germany as the nominal anchor, for other states, the inflation-unemployment trade of I eased(lowers unemployment cost of reducing inflation) influence of Germany as a regional power in the creation and perpetuation of the system. 10 Domestic politics is the main focus of a related approach. One strand of this approach focuses on the credibility of each currency's peg to the deutsche mark. 11 A second strand focuses on changes in domestic politics that lead to convergence of national preferences of European states to lower inflation and stabilize the exchange rate consensus that with expansionary monetary policy, there will be inflation that is unacceptable, and this is a necessary precondition for the establishment of the EMS and for the commitment to Economic and Monetary Union (EMU).17 Intl conflict and monetary reginaliam: Macroeconomic power and influence are incentives for strengthening regional monetary cooperation Fixed exchange rate flexible Monetary policy expansionary restrict Fiscal policy restrictive Expan In the table assuming capital is highly mobile between countries In summary, the effect of policy change in the large country on the economies of smaller countries is substantial in each of the four quadrants in Figure 1. The case of monetary policy under flexible exchange rates could be an exception, depending on other conditions. Generally, however, flexible exchange rates do not insulate coun- tries from policy shocks abroad in the presence of high capital mobility. borrowing. When, under fixed exchange rates, foreign central banks hold the currency of the
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This note was uploaded on 02/08/2012 for the course POLI 243 taught by Professor Markbrawley during the Winter '09 term at McGill.

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Systemic conflict and regional monetary integration reading summary

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