SEMINAR IN INTERNATIONAL MACROECONOMICS EXCHANGE RATE REGIMES IN THE TWENTIETH CENTURY

Transcription

1 Fall 2000 MW, 1:10-2:30 (Hathorn 303) Dr Michael J. Oliver ECONOMICS 334 SEMINAR IN INTERNATIONAL MACROECONOMICS EXCHANGE RATE REGIMES IN THE TWENTIETH CENTURY

2 1 1. COURSE OBJECTIVES a. To explore exchange rate regimes in the twentieth century and how they have affected the macroeconomic environment. b. To provide the student with an opportunity to engage in substantive economic research and historical analysis, applying the knowledge acquired in previous courses. c. To provide the student with an opportunity to express herself/himself orally and in writing within a collegial environment. 2. BASIS FOR EVALUATION a. There will be a mid-term examination dealing with the material covered in the seminar discussion. The grade on this exam will constitute approximately 15% of the course grade. The exam will be held on Monday 16 th October. b. There will be two papers required by each student: i. The first will be about pages in length. It is up to the student to choose the subject for discussion, but as a general guideline, it must examine an exchange rate issue. Please see me if you are unsure about your chosen topic. The paper should briefly review significant literature on the topic and point up the relevance of the topic to macroeconomic study. It will be due on Monday 30 th October and will count towards 15% of the course grade. ii. The second paper is to be about pages in length. In it, the student should refine and sharpen the question (again chosen by the student) and bring the tools of economic analysis to bear upon it. It is essential that historical, empirical and/or quantitative analysis should be employed. In some way, the student should seek to put her/his personal stamp on the analysis. The paper will be presented in summary form during a seminar meeting near the end of the term. The grade on the essay and the presentation will count towards 40% toward the final grade in the course. The full report is to be handed in on Friday 8 th December by 4 PM. c. The remaining 30% of the student s grade will be based upon his/her contribution to the seminar discussions. Students will be asked to take responsibility for leading the discussion each week. The seminars will be assigned during the first meeting of the semester. The subjects for discussion are listed in this handout. Since this is a seminar, questions and comments are not only encouraged, but expected from each student at every class.

3 2 3. READING I have provided an extensive reading list for this seminar, but I wish to stress that students are not expected to read everything which is listed. The reading list has been compiled to help you select books and articles which you are comfortable with, and as such, they contain a good mixture of historical and contemporary economic analysis. Throughout the course outline, the more important reading is highlighted in bold. I have put as many books as possible on reserve in the library (go to the library web page under Search reserves by Course/Instructor ). Books that appear here and which are not available in the library can be obtained through ILL. There is also an extensive number of articles that you can click on and download (highlighted in blue). There are also over 45 articles available on reserve (highlighted in green). There is one required text: Aldcroft, D. H. and Oliver, M. J. (1998), Exchange Rate Regimes in the Twentieth Century, Northampton, MA: Edward Elgar. Other texts which you might find illuminating are: Bordo, Michael D and Capie, F. (1994), Monetary Regimes in Transition, Cambridge: New York. Carbaugh, R. J. (1976), The International Monetary System: History, Institutions, Analyses, Lawrence: University Press of Kansas. Cohen, Benjamin J. (1998), The Geography of Money, Ithaca, NY: Cornell University Press. Cooper, R. N. (1987), The International Monetary System: Essays In World Economics, Cambridge, MA: MIT Press. De Grauwe, P. (1996), International Money: Postwar Trends and Theories, 2 nd edn, Oxford University Press. Eichengreen, B. (1998), Globalizing Capital: A History of the International Monetary System, Princeton University Press. Eichengreen, B. (1992), Monetary Regime Transformations, Northampton, MA: Edward Elgar. James, H. (1996), International Monetary Cooperation Since Bretton Woods, Oxford: Oxford University Press. Kenen, P. B., Papadia, F. and Saccomanni, F. (1994), The International Monetary System, Cambridge: Cambridge University Press.

4 3 Scammell, W. M. (1957), International Monetary Policy, New York: St. Martin s Press. Solomon, R. (1977), The International Monetary System, : An Insider s View, New York : Harper & Row. Solomon, R. (1999), Money On The Move: The Revolution In International Finance Since 1980, Princeton, NJ: Princeton University Press. Solomon, R. (1999),The transformation of the World Economy, 2 nd edn, New York: Macmillan. Tew, B. (1988), The Evolution of the International Monetary System, London: Hutchinson, 4th edition. Triffin, R. (1968), Our International Monetary System: Yesterday, Today And Tomorrow, New York: Random House. Yeager, L. B. (1976), International Monetary Relations: Theory, History, and Policy, New York: Harper and Row, 2nd edition. 4. SEMINAR PROGRAMME Introduction Theoretical Concepts The Gold Standard The Return to Gold The World Economy The Financial Crisis of 1931/The 1930s The Bretton Woods Regime The World Economy, Exam Fall Recess Wednesday 6 th September Monday 11 th September Wednesday 13 th September Monday 18 th September Wednesday 20 th September Monday 25 th September Wednesday 27 th September Monday 2 nd October Wednesday 4 th October Monday 9 th October Wednesday 11 th October Monday 16 th October Wednesday 18 th October

5 4 The International Monetary System Post-1973 Exchange Rate Regimes in Developing Countries The Evolution of the EMS The Tequila Crisis The Asian Crisis Thanksgiving Recess Reports Reports Reports Reports Monday 23 rd October Wednesday 25 th October Monday 30 th October Wednesday 1 st November Monday 6 th November Wednesday 8 th November Monday 13 th November Wednesday 15 th November Monday 20 th November Wednesday 22 nd November Monday 27 th November Wednesday 29 th November Monday 4 th December Wednesday 6 th December

6 5 5. READING LIST The International Financial System Bordo, M. D. & James, H. (2000), The International Monetary Fund: Its Present Role In Historical Perspective, NBER Working Paper Bordo, M. D. & Schwartz, A. J. (1999), Under what circumstances, past and present, have international rescues of countries in financial distress been successful?, Journal of International Money and Finance, Vol. 18 pp Bordo, M. D. & Schwartz, A. J. (2000), Measuring Real Economic Effects Of Bailouts: Historical Perspectives On How Countries In Financial Distress Have Fared With And Without Bailouts, NBER Working Paper Boughton J.M. (2000), From Suez to Tequila: The IMF As Crisis Manager, The Economic Journal, Vol. 110, No. 460, pp Citrin, D & Fischer, S. (2000), Strengthening the International Financial System: Key Issues, World Development, Vol. 28, No. 6, pp Mishkin, F. S. (1999), International Experiences with Different Monetary Policy Regimes, NBER Working Paper Theoretical Concepts Aghion, P., Bacchetta, P. & Banerjee, A. (2000), Currency Crises and Monetary Policy in an Economy with Credit Constraints, European Economic Review, forthcoming. Aizenman, J. & Hausmann, R. (2000), Exchange Rate Regimes and Financial-Market Imperfections, NBER Working Paper Baxter, M. and Stockman, A. C. (1989), Business-cycles and the exchange-rate regime, Journal of Monetary Economics, 23. Bayoumi, T. & Eichengreen, B. (1994), One Money Or Many? Analyzing The Prospects For Monetary Unification In Various Parts Of The World, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Berg, A. & Pattillo, C. (1999), Predicting currency crises: The indicators approach and an alternative, Journal of International Money and Finance, Vol. 18, pp Burnside, C., Eichenbaum, M. & Rebelo, S. (2000), Hedging and Financial Fragility in Fixed Exchange Rate Regimes, European Economic Review, forthcoming.

7 6 Carlson, J. A. and Osler, C. L. (2000), Rational speculators and exchange rate volatility, European Economic Review, Vol. 44, pp Corsetti, G., Morris, S. and Song Shin, H. (November 1999), Does one Soros Make All the Difference? A Theory of Currency Crises with Large and Small Traders. Debelle, G. (1997), Inflation Targeting in Practice, IMF Working Paper WP/97/34. Dornbusch, R. (1976), The theory of flexible exchange rate regimes and macroeconomic policy, Scandinavian Journal of Economics, 78. Eichengreen, B. (1987), Conducting the international orchestra: Bank of England leadership under the classical gold standard, Journal of International Money and Finance, 6. Eichengreen, B. (1999), Transition Strategies And Nominal Anchors On The Road To Greater Exchange-Rate Flexibility, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Eichengreen, B. (1999), Kicking the Habit: Moving from Pegged rates to Greater exchange Rate Flexibility, The Economic Journal, Vol. 109, pp Eichengreen, B. (2000), When to Dollarize, Prepared for the ITAM Dollarization Project meeting in Mexico City, 3-4 December This version was presented at a conference on dollarization hosted by the Federal Reserve Bank of Dallas, 6-7 March Eichengreen, B. (2000), Dollarization and Sense, Business and Strategy. Eichengreen, B. and Rose, A. (2000), The Empirics of Currency and Banking Crises, NBER Reporter, forthcoming. Eichengreen, B., Miller, M. and Portes, R. (eds.) (1988), Blueprints for Exchange Rate Management, London: Academic Press. Flood, R. & Rose, A. (1999), Understanding Exchange Rate Volatility Without the Contrivance of Macroeconomics, Economic Journal, Vol. 109, pp Frankel, J. A. (2000), No Single Currency Regime Is Right For All Countries Or At All Times, NBER Working Paper Ghironi, F. & Giavazzi, F. (1998), Currency areas, international monetary regimes, and the employment inflation tradeoff, Journal of International Economics, Vol. 45, pp Giovannini, A. (1986), Rules of the game during the international gold standard: England and Germany, Journal of International Money and Finance, 5. Glick, R. and Rose, A. K. (1999), Contagion and trade Why are currency crises regional?, Journal of International Money and Finance, Vol. 18, pp

8 7 Goodhart, C. (1998), The two concepts of money: implications for the analysis of optimal currency areas, European Journal of Political Economy, 14. Goldfajn, I. and Valdés, R. O. (1998), Current Account Sustainability: Are currency crises predictable?, European Economic Review, Vol. 42, pp Herrendorf, B. (1999), Transparency, reputation, and credibility under floating and pegged exchange rates, Journal of International Economics, Vol. 49, pp Jeanne, O. & Masson, P. (2000), Currency crises, sunspots and Markov-switching regimes, Journal of International Economics, Vol. 50, pp Kawai, M. and Akiyama, S. (1998), The Role of Nominal Anchor Currencies in Exchange Rate Arrangements, Journal of the Japanese and International Economies, 12. Masson, P. (1999), Contagion: macroeconomic models with multiple equilibria, Journal of International Money and Finance, Vol. 18, pp McCallum, B. T. (2000), Alternative Monetary Policy Rules: A Comparison With Historical Settings For The United States, The United Kingdom, and Japan, NBER Working Paper McKinnon, R. I. (1993), The rules of the game: international money in historical perspective, Journal of Economic Literature, 31. McKinnon, R. & Pill, H. (1999), Exchange rate regimes for Emerging Markets: Moral Hazard and International Over-borrowing, Oxford Review Of Economic Policy, Vol. 15, No. 3, pp Mélitz, J. (1995), The Current Impasse in Research on Optimum Currency Areas, European Economic Review, Vol. 39, pp Mizen, P. (1999), Can foreign currency deposits prop up a collapsing exchange-rate regime?, Journal of Development Economics, Vol. 58, pp Montiel, P. & Reinhart, C. M. (1999), Do capital controls and macroeconomic policies influence the volume and composition of capital flows? Evidence from the 1990s, Journal of International Money and Finance, Vol. 18, pp Obstfeld, M. and Rogoff, K. (2000), The Six Major Puzzles in International Economics: Is There a Common Cause?, NBER Macroeconomics Annual Conference Prasad, S. W. (1999), International Trade and the Business Cycle, The Economic Journal, Vol. 109, pp The Royal Swedish Academy of Sciences has decided to award the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 1999 to Professor Robert A. Mundell, Columbia University, New York, USA for his analysis of monetary and fiscal

9 8 policy under different exchange rate regimes and his analysis of optimum currency areas. Stockman, A. C. (199), Choosing an exchange-rate system, Journal of Banking & Finance, Vol. 23, pp Tonrell. A. & Velasco, A. (1995), Fiscal Discipline and the Choice of Exchange Rate Regime, European Economic Review, Vol. 39, pp Tonrell. A. & Velasco, A. (1998), Fiscal Discipline and the Choice of a nominal anchor in stabilization, Journal of International Economics, Vol. 46, pp The Gold Standard Bayoumi, T., Eichengreen, B., and Taylor, M. P. (1996) (eds), Modern perspectives on the gold standard. Bloomfield, A. I. (1963), Short-Term Capital Movements Under The Pre-1914 Gold Standard, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Bordo, M. D. (1981), The classical gold standard: some lessons for today, Federal Reserve Bank of St Louis Review, 63. Bordo, Michael D, (1999), The Gold Standard and Related Regimes: Collected Essays, New York : Cambridge University Press. Bordo, M. D. and Rockoff, H. (1996), The gold standard as a good housekeeping seal of approval, Journal of Economic History, 56. Cooper, R. N. (1982), The gold standard: historical facts and future prospects, Brookings Papers on Economic Activity, 1. Eichengreen, B. (ed.) (1985), The Gold Standard in Theory and History, New York: Methuen. Eichengreen, B. and Flandreau, M. (eds.) (1997), The Gold Standard In Theory And History, 2 nd edn, New York: Routledge. Flandreau M., Le Cacheux J., Zumer F., Dornbusch R., and Honohan P. (1998), Stability without a pact? Lessons from the European gold standard, , Economic Policy, April, pp Kenen, P. B., Papadia, F. and Saccomanni, F. (1994), The International Monetary System. Muhleman, M. L. (1895), Monetary systems of the world; a study of present currency systems and statistical information relative to the volume of the world s money, with complete abstracts of various plans proposed for the solution of the currency problem, New York, C. H. Nicoll.

10 9 Rockoff, H. (2000), How Long Did It Take The United States To Become An Optimal Currency Area?, NBER Working Paper Series On Historical Factors In Long Run Growth, Historical Paper 124. Tullio, G. & Wolters, J. (2000), Interest Rate Linkages Between the US and the UK During the Classical Gold Standard, Scottish Journal of Political Economy, Vol. 47, No. 1, pp The Return to Gold The World Economy Aldcroft, D. H. (1977), From Versailles to Wall Street, , London: Allen Lane. Aliber, R. Z. (1962), Speculation in the foreign exchanges: the European experience, , Yale Economic Essays, 2. Beaudreau, B. C. (1999), Electric Power, Keynes and the $4.86 Pound: A Re-examination of Britain s return to the Gold Standard, The Journal of European Economic History, Vol. 28, No. 2, pp Bernanke, B. (2000), Essays on the Great Depression, Princeton: Princeton University Press. Cooper, R. N. (1992), Fettered to Gold? Economic Policy in the Interwar Period, Journal of Economic Literature, 30. Dimsdale, N. H. (1981), British monetary policy and the exchange rate , Oxford Economic Papers, Supplement, 33. Eichengreen, B. (1990), Elusive stability: essays in the history of international finance , Cambridge: Cambridge University Press. Eichengreen, B. (1992), Golden fetters: the gold standard and the Great Depression, , New York : Oxford University Press. Eichengreen, B. (1992), The origins and nature of the Great Slump revisited, Economic History Review, 45 Feinstein, C. H. and Toniolo, G. (1997), The European Economy Between The Wars, New York: Oxford University Press. Frenkel, J. A. (1980), Exchange rates, prices and money: lessons from the 1920s, American Economic Review, Papers and Proceedings, 70. Hallwood, C. P. MacDonald, R. and Marsh, I. W. (1997), Crash! Expectational aspects of the departure of the United Kingdom and the United States from the interwar gold standard, Explorations in Economic History, 34.

11 10 Hamilton, J. D. (1988), The role of the international gold standard in propagating the great depression, Contemporary Policy Issues, 6. James, H. (1992), Financial flows across frontiers during the interwar depression, Economic History Review, 45. Moggridge, D. E. (1972), British monetary policy : the Norman Conquest of $4.86, Cambridge: Cambridge University Press. Thomas, L. B. (1972), Some international evidence on international currency experience, , Nebraska Journal of Economics and Business, 11. The Financial Crisis of 1931/The 1930s Balderston, T. (1994), The banks and the gold standard in the German financial crisis of 1931, Financial History, 1. Clavin, P. (1991), The World Economic Conference 1933: the failure of British internationalism, Journal of European Economic History, 20. Clavin, P. (1992), The fetishes of so-called international bankers: central bank cooperation for the world economic conference, , Contemporary European History, 1. Campa, J. M. (1990), Exchange rates and economic recovery in the 1930s: an extension to Latin America, Journal of Economic History, 50. Choudhri, E. V. and Kochin, L. A. (1980), The exchange rate and the international transmission of business cycle disturbances: some evidence from the great depression, Journal of Money, Credit and Banking, 12. Eichengreen, B. (1990), Elusive stability: essays in the history of international finance , Cambridge: Cambridge University Press. Eichengreen, B. and Irwin, D. A. (1995), Trade blocs, currency blocs and the reorientation of world trade in the 1930s, Journal of International Economics, 38. Eichengreen, B. and Sachs, J. (1985), Exchange Rates and Economic Recovery in the 1930s, Journal of Economic History, 45. Einzig, Paul (1933), The Sterling-Dollar-Franc Tangle, New York, The Macmillan Company. Howson, S. (1976), The managed floating pound, , The Banker, 126.

12 11 Howson, S. (1980), The management of sterling, , Journal of Economic History, 40. Howson, S. (1980), Sterling s managed float: the operations of the exchange accounts , Princeton, NJ: Princeton University Press. Hurst, W. (1932), Holland, Switzerland and Belgium and the English gold crisis of 1931, Journal of Political Economy, 40. Kindleberger, C. P. (1987), The World in Depression, Moggridge, D. E. (1970), The 1931 financial crisis: a new view, The Banker, 120. Pumphrey, L. M. (1942), The exchange equalization account of Great Britain, : exchange operations, American Economic Review, 32. Redmond, J. (1988), Effective exchange rates in the nineteen-thirties: the European gold bloc and North America, Journal of European Economic History, 17. Williams, D. (1962-3), London and the 1931 financial crisis, Economic History Review, 15. The Bretton Woods Regime Aliber, R. Z. (1964), The Management Of The Dollar In International Finance, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Bordo, M. D. and Eichengreen, B. (1993) (eds), A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, Chicago, Ill: The University of Chicago Press. Cheung, Yin-Wong & Kon S. Lai (1998), Parity reversion in real exchange rates during the post-bretton Woods period, Journal of International Money and Finance, Vol. 17, pp Cohen, Benjamin J. (1971), The Future of Sterling as an International Currency, London, Macmillan. Eichengreen, B. (2000), From Benign Neglect to Malignant Preoccupation: U.S. Balance- Of-Payments Policy in the 1960s, NBER Working Paper Gardner, Richard N. (1956), Sterling-Dollar Diplomacy; Anglo-American Collaboration In The Reconstruction Of Multilateral Trade, Oxford: Clarendon Press. Horsefield, J. K. (1969), The International Monetary Find, : Twenty Years of International Monetary Cooperation, Volume One: Chronicle, Washington, DC: IMF. Katz, S. I. (1961), Sterling Speculation and European Convertibility: , International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J.

13 12 Lutz, F. A.(1943), International Monetary Mechanisms; The Keynes And White Proposals, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Meltzer, A. H. (1991), US Policy in the Bretton Woods Era, Federal Reserve Bank of St. Louis Review, 73. Mikesell, R. F. (1947), The Role of International Monetary Agreements in a World of Planned Economies, Journal of Political Economy, 55. Scammell, W. M. (1975), International Monetary Policy: Bretton Woods and After, New York: Wiley. Tew, Brian, (1961), The International Monetary Fund: Its Present Role And Future Prospects, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. The World Economy, Aliber, R. Z. (1973), National Preferences And The Scope For International Monetary Reform, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Bell, G. (1973), The Euro-Dollar Market and the International Finance System, New York: Wiley. Bloomfield, A. I. (1954), Speculative And Flight Movements Of Capital In Postwar International Finance, International Finance Section, Dept. of Economics, Princeton University, Princeton, NJ. Eichengreen, B. (ed.) (1996), The Reconstruction of the International Economy, , Cheltenham, UK: Edward Elgar. Foreman-Peck, J. (1995), A history of the world economy : international economic relations since 1850, 2 nd edn, Hemel Hempstead: Harvest Wheatsheaf. Garber, P. M. (1993), The Collapse of the Bretton Woods Fixed Exchange Rate System, in M. D. Bordo and B. Eichengreen (eds), A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, Chicago, Ill: The University of Chicago Press. Giersch, H. (1991), The world economy in perspective: essays on international trade and European integration, Aldershot : Edward Elgar. Graham, A. and Seldon, A. (eds.) (1990), Government and economies in the postwar world: economic policies and comparative performance, , London: Routledge. Halm, G. N. (1968), International Monetary Cooperation, Chapel Hill, The University of North Carolina Press.

14 13 Halm, G. N. (1971), The International Monetary Fund And Flexibility Of Exchange Rates, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Kenwood, A. G. and Lougheed, A. L. (1992), The growth of the international economy, : an introductory text, London: Routledge. Maddison, A. (1989), The world economy in the 20th century, Paris: Development Centre of the Organisation for Economic Co-operation and Development. Maddison, A. (1991), Dynamic forces in capitalist development : a long-run comparative view, Oxford: Oxford University Press. Maddison, A. (1995), Monitoring the world economy, , Paris: Development Centre of the Organisation for Economic Co-operation and Development. Pollard, S. (1997), The International Economy Since 1945, New York: Routledge, Swoboda, A. K. (1968), The Euro-Dollar Market: An Interpretation, Essays in International Finance, No. 64, Princeton, NJ: Princeton University Press. Triffin, R. (1979), Gold and the Dollar Crisis: Yesterday and Tomorrow, New Haven, CT: Yale University Press. Wee, Herman van der, (1986), Prosperity and upheaval: the world economy , London: Viking. The International Monetary System Post-1973 Aliber, R. Z. (ed.) (1977), The Political Economy Of Monetary Reform, Montclair, N.J.: Allanheld, Osmun. Barsky, R. B. & Kilian, L. (2000), A Monetary Explanation of the Great Stagflation of the 1970s, NBER Working Paper Blyth, M. (2000), Governing by Trope? Markets, Ideas, and Monetary Crises in a Global Financial Order, Paper in Progress for the Cornell Conference on Money, Power and Ideology in the 21 st Century, March 31 st -April 2 nd Cline, W. R. (1994), International Economic Policy in the 1990s, Washington, DC: Institute for International Economics. Cooper, R. N. (1972), Sterling, European Monetary Unification, And The International Monetary System, London: British-North American Committee. Currie, D. (1993), International Cooperation in Monetary Policy: Has it a Future?, Economic Journal, Vol. 103.

15 14 Dreyer, J. S., Haberler, G. and Willett, T. D. (1982), The International Monetary System : A Time Of Turbulence: A Conference Sponsored By The American Enterprise Institute For Public Policy Research, Washington, DC: American Enterprise Institute for Public Policy Research. Eichengreen, B. (1999), Strengthening the International Financial Architecture: Where Do We Stand?, Paper prepared for Prepared for the East-West Center Workshop on International Monetary and Financial Reform, Honolulu, October 1-2, Ethier, W. and Bloomfield, A. L. (1975), Managing the Managed Foat, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Eun, C. & Jin-Gil Jeong (1999), International price level linkages: Evidence from the post-bretton Woods era, Pacific-Basin Finance Journal, Vol. 7, pp Gardner, Richard N. (1980), Sterling-dollar Diplomacy in Current Perspective : the Origins and the Prospects of our International Economic Order, New York: Columbia University Press. Gilpin, R. (2000), The Challenge of Global Capitalism: the World Economy in the 21st Century, Princeton, NJ: Princeton University Press. Kawai, M. & Akiyama, S. (1998), The Role of Nominal Anchor Currencies in Exchange Rate Arrangements, Journal of the Japanese and International Economies, Vol. 12, pp Kenen, P. B. (ed) (1994), Managing the World Economy: Fifty Years after Bretton Woods. Washington, DC: Institute for International Economics. Murphy, J. C. (1979), The International Monetary System: Beyond The First Stage Of Reform, Washington, DC: American Enterprise Institute for Public Policy Research. Posner, M. (ed.) (1986), Problems Of International Money, , Washington D.C.: International Monetary Fund. Schwartz, A. J. (2000), The Rise and Fall of Foreign Exchange Market Intervention, NBER Working Paper Solomon, R. (1990), Partners in prosperity: the report of the Twentieth Century Fund Task Force on the International Coordination of National Economic Policies, New York: Priority Press Publications. Taylor, M. P. & Sarno, L. (1998), The behavior of real exchange rates during the post- Bretton Woods period, Journal of International Economics, Vol. 46, pp Volcker, Paul A. [et al.] (eds.) (1987), International Monetary Cooperation : Essays In Honor Of Henry C. Wallich, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J.

16 15 Willett, T. D. (1998), Credibility and Discipline Effects of Exchange Rates as Nominal Anchors: The Need to Distinguish Temporary from Permanent Pegs, The World Economy, Vol. 21, No. 6, pp Exchange Rate Regimes in Developing Countries Bond, M. E. (1980), Exchange Rates, Inflation and Vicious Circles, IMF Staff Papers, 27. Cline, W. R. (1976), International Monetary Reform And The Developing Countries, Washington : Brookings Institution. Cooper, R. N. (1971), Currency Devaluation In Developing Countries, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Crockett, A. D. and Nsouli, S. M. (1977), Exchange Rate Policies for Developing Countries, Journal of Development Studies, 13. Edwards, S. and Montiel, P. (1989), Devaluation Crises and the Macroeconomic Consequences of Postponed Adjustment in Developing Countries, IMF Staff Papers, 36. Leblang, D. A. (1999), Domestic Political Institutions and Exchange Rate Commitments in the Developing World, International Studies Quarterly, Vol. 43, pp Sachs, J. D. (1989), Developing Country Debt And Economic Performance, Chicago: University of Chicago Press. Schuknecht, L. (1999), Fiscal policy cycles and the Exchange Rate Regime in Developing Countries, European Journal of Political Economy, Vol. 15, pp Sekkat, K. & Varoudakis, A. (2000), Exchange Rate Management and Manufactured Exports in Sub-Saharan Africa, Journal of Development Economics, Vol. 61, pp The Evolution of the EMS Bartolini, L. & Prati, A. (unknown), Soft Exchange Rate Bands and Speculative Attacks: Theory, and Evidence from the ERM Since August Bodart, V. & Reding, P. (1999), Exchange rate regime, volatility and international correlations on bond and stock markets, Journal of International Money and Finance, Vol. 18, pp Cobham, D. (1997), Inevitable disappointment? The ERM as the framework for UK monetary policy, , International Review of Applied Economics, 11.

17 16 Cohen, Benjamin J. (1981), The European monetary system: an outsider s view, International Finance Section, Dept. of Economics, Princeton University Princeton, N.J. Corsetti, G. & Pesenti, P. (1999), Stability, asymmetry and discontinuity: the outset of European Monetary Union, Brookings Papers on Economic Activity, December. De Grauwe, P. (1990), The Cost of Disinflation and the European Monetary System, Open Economies Review, 1. Dornbusch, R. (1996), Debt and Monetary Policy: the Policy Issues, NBER Working Paper Eichengreen, B. (1992), Should the Maastricht Treaty be saved?, International Finance Section, Dept. of Economics, Princeton University, Princeton, NJ. Eichengreen, B. (1993), Reconstructing Europe s Trade And Payments: The European Payments Union, Ann Arbor: University of Michigan Press. Eichengreen, B. (1993), European Monetary Unification, Journal of Economic Literature, 31. Eichengreen, B. (1996), A More Perfect Union?: The Logic Of Economic Integration, International Finance Section, Dept. of Economics, Princeton University, Princeton, NJ. Eichengreen, B. (1997), European Monetary Unification: Theory, Practice, And Analysis, Cambridge, MA: MIT Press. Eichengreen, B. (unknown), The Euro One Year On, The Journal of Policy Modeling, forthcoming. Eichengreen, B. & Frieden, J. (eds.) (1994), The Political Economy Of European Monetary Unification, Boulder, CO: Westview Press. Eichengreen, B. & Frieden, J. (unknown), The Political Economy of European Monetary Unification: An Analytical Introduction. Eichengreen, B. and Wyplosz, C. (1993), The Unstable EMS, Brookings Papers on Economic Activity, 1. Favero, C. A. & Giavazzi, F. (2000), Looking for Contagion: Evidence from the ERM, NBER Working Paper Fratianni, M., von Hagen, J. and Waller, C. (1992), The Maastricht Way To EMU, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J. Giavazzi, F. Micossi, S. and Miller, M. (eds) (1988), The European Monetary System, Cambridge: Cambridge University Press. Giovannini, A. (1990), The transition to European monetary union, International Finance Section, Dept. of Economics, Princeton University, Princeton, N.J.

18 17 Giovannini, A. (1995), The Debate On Money In Europe, Cambridge, MA: MIT Press. Gros, D. and Thygesen, N. (1992), European Monetary Integration, London: Longman Group Limited. Hu, M. Y. & Tsoukalas, C. (1999), Combining conditional volatility forecasts using neural networks: an application to the EMS Exchange Rates, Journal of International Financial Markets, Institutions and Money, Vol. 9, pp Mills, T. C. & Holmes, M. J. (1999), Common Trends and Cycles in European Industrial Production: Exchange Rate Regimes and Economic Convergence, The Manchester School, Vol. 67, No. 4, pp Schröder, J. (1999), The Euro, dollar, and international monetary system, Journal of Asian Economics, Vol. 10, pp Svensson, L. E. O. (2000), The First Year of The Eurosystem: Inflation Targeting Or Not?, NBER Working Paper Weber, A. A. (1991), Reputation and Credibility in the European Monetary System, Economic Policy, 12. Woo, Kai-Yin. (1999), Cointegration analysis of the intensity of the ERM currencies under the European Monetary System, Journal of International Financial Markets, Institutions and Money, Vol. 9, pp Wren-Lewis, S., Westaway, P., Soteri, S. and Barrell, R. (1991), Evaluating the UK s Choice of Entry Rate into the ERM, Manchester School of Economic and Social Studies, 59. The Asian Crisis Allen, F. & Gale, D. (1999), Bubbles, Crisis and Policy, Oxford Review of Economic Policy, Vol. 15, No. 3, pp Chang, Ha-Joon. (2000), The Hazard of Moral Hazard: Untangling the Asian Crisis, World Development Vol. 28, No. 4, pp Cossetti, G., Pesenti, P. and Roubini, N. (1998a), What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview. Cossetti, G., Pesenti, P. and Roubini, N. (1998b), What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate. Crafts, N. F. R. (1999), Implications of Financial Crisis For east Asian Trend Growth, Oxford Review of Economic Policy, Vol. 15, No. 3, pp

19 18 Edison, H. J., Luangaram, P., & Miller, M. (2000), Asset Bubbles, Leverage and Lifeboats : Elements of the East Asian Crisis, The Economic Journal, Vol. 110, pp Eichengreen, B. (1999), Toward A New International Financial Architecture: A Practical Post-Asia Agenda, Washington, DC: Institute for International Economics. Eichengreen, B. & Hausmann, R. (1999), Exchange Rates and Financial Fragility, NBER Working Paper Fane, G. & McLeod, Ross H. (1999), Lessons for monetary and banking policies from the economic crises in Indonesia and Thailand, Journal of Asian Economics, Vol. 10, pp Fernald, J. G & Babson, O. D. (1999), Why Has China Survived the Asian Crisis So Well? What Risks Remain?, Board of Governors of the Federal Reserve System, International Finance Discussion Papers, Number 633. Fernald, J., Edison, H. & Loungani, P. (1999), Was China the first domino? Assessing links between China and other Asian economies, Journal of International Money and Finance, Vol. 18, pp Husted, S. & MacDonald, R. (1999), The Asian currency crash: were badly driven fundamentals to blame?, Journal of Asian Economics, Vol. 10, pp Kamin, S. B. (1999), The current international financial crisis: how much is new?, Journal of International Money and Finance, Vol. 18, pp Kaminsky, G. L. & Schmukler, S. L. (1999), What triggers market jitters? A chronicle of the Asian crisis, Journal of International Money and Finance, Vol. 18, pp Lu, D. & Yu, Q. (1999), Hong Kong s exchange rate regime: Lessons from Singapore, China Economic Review, Vol. 10, pp McKinsey Institute (1998), The Roots of Korea s Crisis, The McKinsey Quarterly 1998, Number 2, pp McKinsey Institute (1999), Asian Banking: After the Storm, The McKinsey Quarterly 1999, No. 2, pp Mishkin, F. S. (1999), Lessons from the Asian crisis, Journal of International Money and Finance, Vol. 18, pp Sarno, L. & Taylor, M. P. (1999), Moral hazard, asset price bubbles, capital flows, and the East Asian crisis: the first tests, Journal of International Money and Finance, Vol. 18, pp Sazanami, Y. & Yoshimura, S. (1999), Restructuring East Asian exchange rate regimes, Journal of Asian Economics, Vol. 10, pp

20 19 Latin American Crises Eichengreen, B. and Lindert, P. H. (1989) (eds.), The International Debt Crisis In Historical Perspective, Cambridge, MA: MIT Press. Flood R., Perraudin, W. & Vitale, P. (1998), Reserve and exchange rate cycles, Journal of International Economics, Vol. 46, pp Mishkin, F. S. (1999), Lessons from the Tequila Crisis, Journal of Banking & Finance, Vol. 23, pp The Transitional Economies Desai, P. (1998), Macroeconomic Fragility and Exchange Rate Vulnerability: A Cautionary Record of Transition Economies, Journal of Comparative Economics, Vol. 26, pp Drabek, Z. & Brada, J. C. (1998), Exchange Rate Regimes and the Stability of Trade Policy in Transition Economies, Journal of Comparative Economics, Vol. 26, pp Edwards, S. & Savastano, M. A. (2000), Exchange Rates In Emerging Economies: What Do We Know? What Do We Need To Know?, NBER Working Paper 7228.

21 20 6. FORMAT FOR ESSAYS 1. Please type all essays, reports and assignments and follow these instructions: a. Try to use either Helvetica or Palatino font, set to 12 pitch. b. The top, bottom and right margins should be set at 1 inch and the left margin at 1.5 inches. c. Please double space the text, except where you include a lengthy quote (discussed below). d. Number pages consecutively, in the top right hand corner of each page. Do not number the cover/title sheet. e. Place figures and tables either within the text (if you can do this) or at the end of the document. 2. To reference an article, chapter or book in an essay, please note the following example: This is coupled to the second criticism of monetarism, about how a faster rate of money growth is divided between higher output and rising prices. Friedman once stated that this area was the missing equation of monetarist theory (Friedman 1970, pp ). 3. If you quote from an author who has produced more than one book or article in that particular year, then the format is as follows: Following on from the Green Paper, the authorities prepared a series of discussion papers, culminating in new arrangements from 5 August 1981 (Bank of England 1980, 1981a, 1981b). 4. If you wish to include a quotation from an article or book which is longer than two lines, then there are two ways of doing this. Note that the quotation is

22 21 indented and is in single spacing, while the main text is double spaced. The pitch of the font DOES NOT change. Either: This failure by Friedman to provide a clear analytical response to this problem even led Johnson (1971, p. 12) to comment that the monetarist counter-revolution would peter out because: I believe the Keynesians are right in their view that inflation is a far less serious social problem than mass unemployment... [T]he second reason is that monetarism is seriously inadequate as an approach to monetary theory, judged by prevailing standards of academic economics, and in the course of repairing its intellectual fences and achieving full scientific respectability it will have to compromise irretrievably with its Keynesian opposition. Or: This failure by Friedman to provide a clear analytical response to this problem even led one author to comment that the monetarist counter-revolution would peter out because: I believe the Keynesians are right in their view that inflation is a far less serious social problem than mass unemployment... [T]he second reason is that monetarism is seriously inadequate as an approach to monetary theory, judged by prevailing standards of academic economics, and in the course of repairing its intellectual fences and achieving full scientific respectability it will have to compromise irretrievably with its Keynesian opposition. (Johnson 1971, p. 12) 5. As you are using the Harvard referencing system, there is no need for footnotes. You might want to include endnotes, however. If you do use endnotes, please keep endnotes to a minimum. Try to keep only technical definitions or points of clarification for endnotes. Endnotes should be placed at the end of the assignment, but before the references. These should be double spaced, e.g.:

23 22 Mrs Thatcher believed that previous governments had either ignored the rise in inflation, or had concluded that the costs of ridding inflation from the system would require a high sacrifice ratio The sacrifice ratio is the amount of lost output that an economy experiences in order to reduce inflation. 6. Citing web pages: (accessed May 20, 1999) 7. How to compile the references. Please use only this format for the references. All of the examples here should cover every type of reference that you will need for your assignment and reports. Please note that the references are single spaced. Aldcroft, D. H. (1977), From Versailles to Wall Street, , London: Allen Lane. Aldcroft, D. H. (1993a), The European Economy, , London: Routledge. Aldcroft, D. H. and Oliver, M. J. (1995), The Legacy of the Gold Standard, The Economic Review, Vol. 12, No. 4, pp Artis, M. J. and Cobham, D. (eds.) (1991), Labour s Economic Policies Manchester: Manchester University Press. Bean, C. and Crafts, N. (1996), British economic growth since 1945: relative economic decline... and renaissance?, in N. Crafts and G. Toniolo (eds.), Economic Growth in Europe Since 1945, Cambridge: Cambridge University Press.

24 23 7. EVALUATION RUBRIC FOR ESSAYS Competency: Sub-competency: (Grade A) A + = 70+ A = A - = Analyzing Economic Environments Macroeconomic Environments Changes in the variable are accurately summarised and explained in terms of all the relevant causal variables. The summary is timely. Forecasts are reasonable given current trends, and fully justified in terms of reasonable projections of all the relevant causal variables. Theoretically irrelevant variables do not enter the analysis. There is no confusion between dependent and independent variables or between autonomous versus induced changes in variables (i.e., shifts in versus movements along a curve). (Grade B) B + = B = B - = Trends are accurately summarised and the summary is timely. The analysis of change and/or the forecast is fundamentally sound, although there are minor errors or omissions in parts of the analysis. (Grade C) C+ = C = C - = The summary of trends is basically correct, although there may be minor inaccuracies or some of the information may be slightly outdated. Although the analysis of changes or the forecast shows some understanding of macroeconomic theory, errors or omissions were prevalent enough to warrant a review of the material and more practice. (Grade D) The summary of trends is missing or seriously lacking, and the analysis shows some understanding even though errors are prevalent OR, the analysis demonstrates little understanding of macroeconomic theory, and the summary of trends is basically correct but with some inaccuracies or outdated information. (Grade F) 0-38 The summary of trends is missing or seriously deficient and the analysis demonstrates little understanding of macroeconomic cause-effect relationships.

25 24 Competency: Sub-competency: (Grade A) A + = 70+ A = A - = (Grade B) B + = B = B - = C + = (Grade C) C+ = C = C - = Effective Communication Writing (Brief Documents) The document stands out as being effective. It is well organized and addresses the audience. Conclusions are clearly stated and supported where appropriate with properly formatted citations. It flows crisply with concisely written sentences and well chosen words. Spelling, punctuation, grammar, and syntax are excellent. Tables and charts support the analysis and are clearly explained. The document is satisfactorily written with good organization and spelling. However, it has a few mechanical errors, awkward sentences, or poor word choices. OR, important tables, charts, or references are missing or poorly explained or formatted. The document has potential, but needs editing. The organization is decent and there are only a few spelling or mechanical errors. However, sentences often do not flow crisply enough, passive voice is used too often, or vocabulary is imprecise. Good writing is within reach. As you read, pay attention to style, sentence structure, and word selection. Actively practice, carefully proof read, re-write, and ask a good writers to review your drafts. (Grade D) Although you have a message, your credibility is undermined due to ineffective writing. It is disorganized and/or there are many spelling, grammar, syntax, and punctuation errors. Sentences do not flow crisply and word choice is awkward. Because you are making basic errors, you should study grammar and composition texts, enroll in writing courses, and seek outside help as you practice. (Grade F) 0-38 The document is incoherent; it is not clear what your message is. There are many spelling, grammar, and punctuation errors. Sentences do not flow crisply and word choice is awkward. You should study writing and critical thinking texts, enroll in basic skills courses, and seek outside help as you practice in these areas.

26 25 Competency: Sub-competency: (Grade A) A + = 70+ A = A - = (Grade B) B + = B = B - = C + = (Grade C) C+ = C = C - = (Grade D) Utilizing Computers Word Processing and Desktop Publishing The document stands out as being neat and aesthetically pleasing. Margins, fonts, and spacing are consistent. If appropriate, technical or quantitative information is effectively presented in tables and charts that are clear and properly labelled. The document is neat and satisfactorily presented, but the presentation doesn t stand out. OR, essential tables and charts are missing or not too useful. The document is neat and has potential, but it needs work in more than one area (aesthetics/layout, margins and spacing, fonts, integration of tables or charts, etc.). The presentation detracts from your message and undermines credibility with your audience. It needs considerable work in many areas. (Grade F) 0-38 The document is so sloppy, unappealing, and disorganized, the audience is unwilling to invest effort in reading and contemplating its message.