EICHENGREEN GLOBALIZING CAPITAL PDF

Career[ edit ] Eichengreen has done research and published widely on the history and current operation of the international monetary and financial system. He received his B. He was a senior policy advisor to the International Monetary Fund in and , although he has since been critical of the IMF. In , he served as a fellow of the American Academy of Arts and Sciences. For a variety of reasons, including among others a desire of the Federal Reserve to curb the US stock market boom, monetary policy in several major countries turned contractionary in the late s—a contraction that was transmitted worldwide by the gold standard.

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Selgin, George Published by EH. Princeton: Princeton University Press, Reviewed for EH. The ultimate failure of all such arrangements, as well as the abandonment of the international gold standard itself, has led Berkeley economist Barry Eichengreen to wonder whether any system of fixed, or at least relatively stable, exchange rates can survive in a world of democratic governments.

Elaborating a thesis put forth by Karl Polanyi in , Eichengreen argues that modern democratic governments are bound to yield to pressures to pursue goals, such as the avoidance of cyclical unemployment, that conflict with the maintenance of fixed or pegged exchange rates. Monetary union was the quid pro quo. In some loose sense, of course, democratic pressures fueled the abandonment of the international gold standard and of later schemes for pegging exchange rates.

But we should not forget the context: previous changes in domestic monetary arrangements that subjected money to government control. Of particular importance was the establishment of central banks, which removed the enforcement of the gold- standard mechanism from the hands of private, competing bankers, increasing the risk of both a suspension of payments and subsequent yielding to inflationary pressures.

Twentieth-century voters might never have developed a taste for accommodative monetary policies had non-democratic governments of previous centuries not set a precedent for such policies by reshaping monetary arrangements to serve their own fiscal ends.

Eichengreen also tends, in my view, to overstate the extent to which democratic nations must rely upon accommodative central bank policies, unhindered by fixed exchange rates, to avoid financial and macroeconomic turmoil. But that openness is itself to some extent at least a matter of policy. The voters may well favor demand-management approaches to structural alternatives for avoiding financial instability; but this preference has more to do with special-interest politics standing in the way of desirable structural reforms than with sound economic theory.

Nor is it altogether obvious that the international gold standard promoted internal macroeconomic instability. Although the standard proved deflationary until the mids, this deflation does not seem to have stifled economic growth. Even Marshall, whom Eichengreen cites as a critic of gold, suggested that the deflation might actually have been beneficial. The Canadian banks ran into legal limits themselves, which were then loosened. The restored gold standard of the 20s and 30s was another matter entirely.

Here central banks played an active role, mainly by trying to run the gold standard on the cheap, supplementing gold reserves with holdings of foreign exchange instead of further devaluing their currencies or enduring more deflation so as to achieve a higher, sustainable relative price of gold.

This cartel-like arrangement could only work so long as creditor central banks resisted the temptation to cash in their foreign exchange holdings. It was, consequently, far more vulnerable to speculative collapse than its prewar counterpart. The Canadian case is again relevant here, for Canada had little difficulty maintaining its gold standard until while avoiding financial crises without the help of a central bank, even while experiencing massive capital inflows. It is largely compelling, thought-provoking, highly informative, and a pleasure to read.

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Globalizing Capital: A History of the International Monetary System

Shelves: economics , non-fiction , ebook I initially shelved this to read on the hoped-for assumption that it was a more ambitious book than it is. Fortuitously, I ended up actually reading it because the narrow subject matter it does tackle is something I needed to learn about for another project. So this is a narrative history walking through the steps and crises not of the international finance system in general, but of the gold standard or lack thereof. It begins in the early s in Europe, and remains focused there and on the I initially shelved this to read on the hoped-for assumption that it was a more ambitious book than it is. It begins in the early s in Europe, and remains focused there and on the United States until more or less the s, at which point it finally expands to discuss Asia and the largest South American economies. Still, it seems a bit odd to me that the preface frames the ups and downs the narrative describes as more or less the outcome of a single class struggle. One side of this more or less make sense to me.

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Selgin, George Published by EH. Princeton: Princeton University Press, Reviewed for EH. The ultimate failure of all such arrangements, as well as the abandonment of the international gold standard itself, has led Berkeley economist Barry Eichengreen to wonder whether any system of fixed, or at least relatively stable, exchange rates can survive in a world of democratic governments.

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Barry Eichengreen

Reviews 3 First published more than a decade ago, Globalizing Capital remains an indispensable part of the economic literature today. Written by renowned economist Barry Eichengreen, this classic book emphasizes the importance of the international monetary system for understanding the international economy. Brief and lucid, Globalizing Capital is intended not only for economists, but also a general audience of historians, political scientists, professionals in government and business, and anyone with a broad interest in international relations. This updated edition continues to document the effect of floating exchange rates and contains a new chapter on the Asian financial crisis, the advent of the euro, the future of the dollar, and related topics.

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