The International Monetary System: A Time of Turbulence

By Jacob S. Dreyer; American Enterprise Institute for Public Policy Research | Go to book overview
Save to active project


Sven W. Arndt

Jacob Dreyer's paper begins with a discussion of international economic interdependence and proceeds from there to macroeconomic policy coordination. This is an appropriate sequence insofar as the call for coordination is typically based on the fact of interdependence and occasionally on its purported increase.

That countries are economically interdependent none will deny; that they have become increasingly interdependent in recent years, as Ralph Bryant has suggested in these pages, may be true but is far from evident; but that interdependence -- its level or rate of increase -- creates a presumption in favor of greater coordination does not follow at all. It does not follow for several reasons, including the possibility that coordination may be the cause of global economic instabilities.

It is therefore not clear that interdependence requires more coordination and surveillance than we already have. Instead of letting interdependence dictate the degree of coordination, a country may wish to let the available quality of coordination determine how much of it it wants, then choose the degree of interdependence that goes with it. When countries concluded that coordination under Bretton Woods had become too costly and burdensome, they opted for floating rates. It is, of course, widely agreed that until countries can coordinate their inflation preferences exchange rates will have to remain flexible, but flexibility is also required in order to accommodate divergent growth and productivity trends and to manage the various shocks that are visited upon the system from time to time.

In addition to the question of whether interdependence or coordination came first, more careful attention needs to be given to the precise form coordination is to take and the purposes for which it is to be undertaken. Those who have criticized existing international monetary arrangements as a "nonsystem" often appear to be concerned mainly with the absence of rules and with international civil servants; whereas those who have thought about the object of coordination have some


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
The International Monetary System: A Time of Turbulence
Table of contents

Table of contents



Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 523

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?