Prof. Mark R. Brawley McGill University 330 Leacock Dept. of Political Science Office Hours: Tue. 2-3, Wed. 10-11 Fall 2017 Course Description This course examines some of the political issues surrounding international monetary relations, including how monetary policies are selected, the impact of international monetary problems, and rules governing international monetary flows. Subjects include policy decisions under the gold standard, the Bretton Woods system, the role of international monetary institutions such as the IMF and IBRD, floating exchange rates, international debt, advent of the euro, and prospects for the future. Course Requirements The grade for this course consists of participation in discussion conferences led by the TAs (worth 10% of the total grade), a midterm exam scheduled for October 16 (worth 25% of the total grade), a research paper due November 22 (six pages double-spaced worth 25% of the total grade), and a formal final exam (worth 40% of the total course grade). The midterm consists of short answers and one essay; the final consists of short answers and two essays. Course Materials All assigned readings are available on MyCourses or JSTOR. Two books are recommended, but not required. Consider purchasing one (not both): Barry Eichengreen, Globalizing Capital, Princeton University Press, 1996 Jeffry Frieden, Global Capitalism, Norton, 2006 Policy on Academic Honesty McGill University values academic integrity. Therefore all students must understand the meaning and consequences of cheating, plagiarism and other academic offenses under the Code of Student Conduct and Disciplinary Procedures (see http://www.mcgill.ca/integrity www.mcgill.ca/integrity for more information). Note: In accord with McGill University s Charter of Students Rights, students in this course have the right to submit in English or in French any written work that is to be graded. Poli 445 Fall 2017 1
Course Schedule Lecture 1 (Sept. 6): Introduction/Issues: Cooper, Richard N., Prolegomena to the Choice of an International Monetary System, International Organization 29 (1), Winter 1975, 63-97 (JSTOR); Fischer, Stanley, On the Need for an International Lender of Last Resort, Princeton Essays in International Finance No. 220, November 2000 (MyCourses) Lecture 2 (Sept. 11): Balance of Payments, the Uses of Money, & Exchange Rates: Frieden, Jeffry, Piero Ghezzi and Ernesto Stein, Politics and Exchange Rates: A Cross-Country Approach, in The Currency Game, ed. by J. Frieden and E. Stein, Johns Hopkins University Press, 2001, 21-63 (MyCourses); Bearce, David, Not Complements, But Substitutes: Fixed Exchange Rates, Central Bank Independence, and External Currency Stability, International Studies Quarterly 52 (4) December 2008, 807-824 (JSTOR) Lecture 3 (Sept. 13): Exchange Rates, Key Currencies & Mundell-Fleming: Strange, Susan, The Politics of International Currencies, World Politics 23 (2), January 1971, 215-231 (JSTOR); Cohen, Benjamin J. Currency and State Power, 2009 (MyCourses); Bearce, David, Societal Preferences, Partisan Agents, and Monetary Policy Outcomes, International Organization 57 (2) Spring 2003, 373-410 (JSTOR) Lecture 4 (Sept. 18): Britain and the Gold Standard: Bordo, Michael D., The Gold Standard: The Traditional Approach, in A Retrospective on the Classical Gold Standard, 1821-1931, edited by Michael D. Bordo and Anna J. Schwartz, Chicago: University of Chicago Press, 1984 (MyCourses) Lecture 5 (Sept. 20): The Gold Standard s Performance: Flandreau, Marc, The French Crime of 1873: An Essay on the Emergence of the International Gold Standard, 1870-1880, Journal of Economic History 56 (4), Dec. 1996, 862-897 (JSTOR); Frieden, Jeffry, The Dynamics of International Monetary Systems: International and Domestic Factors in the Rise, Reign and Demise of the Classical Gold Standard, in Coping with Complexity in the International System, ed. by R. Jervis and J. Snyder, Westview, 1999, 137-162 (MyCourses) CONFERENCES BEGIN SEPTEMBER 25 Poli 445 Fall 2017 2
Lecture 6 (Sept. 25): The Interwar Period: Obstfeld, Maurice, J.C. Shambaugh and Alan M. Taylor, Monetary Sovereignty, Exchange Rates and Capital Controls: The Trilemma in the Interwar Period, IMF Staff Papers Vol. 51, 2004: 75-108 (My- Courses); Odell, John, From London to Bretton Woods: Sources of Change in Bargaining Strategies and Outcomes, Journal of Public Policy 8 3/4, 287-315 (JSTOR) Lecture 7 (Sept. 27): The Interwar Period: Eichengreen, Barry and Olivier Jeanne, Currency Crises and Unemployment: Sterling in 1931, in Currency Crises, ed. by Paul Krugman, Chicago: University of Chicago Press, 2000, 7-46 (MyCourses); Eichengreen, Barry and Marc Flandreau, The Rise and Fall of the Dollar, or When Did the Dollar Replace Sterling as the Leading Reserve Currency? 2008 (MyCourses) Lecture 8 (Oct. 2): Creating Bretton Woods: Ikenberry, G. John, The Political Origins of Bretton Woods, (with comments by John Odell) in A Retrospective on the Bretton Woods System, edited by Michael D. Bordo and Barry Eichengreen, University of Chicago Press, 1993, 155-198 (MyCourses) Lecture 9 (Oct. 4): Speculation and Bretton Woods: Eichengreen, Barry, From Benign Neglect to Malignant Preoccupation: U.S. Balance of Payments Policy in the 1960s, 1999 (MyCourses) Lecture 10 (Oct. 11): The U.S. and the Breakdown of Bretton Woods: Gowa, Joanne, State Power, State Policy: Explaining the Decision to Close the Gold Window, Politics & Society 13 (1), 1984, 91-117 (JSTOR); Odell, John S., The U.S. and the Emergence of Flexible Exchange Rates: an Analysis of Foreign Policy Change, International Organization 33 (1), Winter 1979, 57-81 (JSTOR) Midterm Oct. 16 Lecture 11 (Oct. 18): Flexible Exchange Rates: Larrain B., F. and A. Velasco, Exchange-Rate Policy in Emerging Market Economies: The Case for Floating, Princeton Essays in International Finance, No. 224, Dec. 2001 (MyCourses); Cooper, Richard N., Exchange Rate Choices, 1999 (MyCourses) Lecture 12 (Oct. 23): Advent of the 1980s Debt Crisis: Kahler, Miles, Politics and International Debt: Explaining the Crisis, International Organization 39, Summer 1985, 357-382 (JSTOR); Lipson, Charles, The International Organization of Third World Debt, International Organization 35 (4), Autumn 1981, 603-631 (JSTOR) Poli 445 Fall 2017 3
Lecture 13 (Oct. 25): Responding to the 1980s Debt Crisis: Lipson, Charles, Bankers Dilemmas: Private Cooperation in Rescheduling Sovereign Debts, World Politics 38 (1), October 1985, 200-225 (JSTOR); Bird, Graham and Dane Rowlands, Financing Balance of Payments Adjustment: Options in the Light of the Illusory Catalytic Effect of IMF Lending, 2003 (MyCourses) Lecture 14 (Oct. 30): SAPs: Polak, Jacques, The Changing Nature of IMF Conditionality, Princeton Essays in International Finance No. 184, September 1991 (My- Courses) Lecture 15 (Nov. 1): Politics and IMF Lending: Broz, J. Lawrence and M. B. Hawes, Congressional Politics of Financing the IMF, International Organization 60, Spring 2006, 367-399 (JSTOR); Broz, J. Lawrence and Brock Blomberg, The Political Economy of IMF Voting Power, unpublished manuscript, 2006 (MyCourses); Copelovitch, Mark, Private Debt Composition and the Political Economy of IMF Lending, WCFIA Working Paper 04-05, 2004 (MyCourses) Lecture 16 (Nov. 6): Currency Crises of the 1990s: Krugman, Paul, Currency Crises (MyCourses); Reinhart, Carmen, Graciela Kaminsky and Morris Goldstein, Notes on Contagion, MPRA Paper No. 24569, 2000 (MyCourses) Lecture 17 (Nov. 8): The East Asian Financial Crises: DeLong, Brad, Between Meltdown and Moral Hazard: The International Monetary and Financial Policies of the Clinton Administration, 2001 (MyCourses); Sachs, Jeffrey, The International Lender of Last Resort: What are the Alternatives? Conference Proceedings Series No. 43, Federal Reserve Bank of Boston, 1999 (MyCourses) Lecture 18 (Nov. 13): Learning from the 1990s?: Obstfeld, Maurice, J. C. Shambaugh and Alan M. Taylor, Financial Stability, the Trilemma and International Reserves, American Economic Journal: Macroeconomics 2 (2), April 2010, 57-94 (JS- TOR); Dornbusch, Rudiger, After Asia: New Directions for the International Financial System, in Financial Systems and Business Cycles, Washington DC: IMF, 1998:177-186 (MyCourses) Lecture 19 (Nov. 15): Explaining EMU and Widespread Pegging: Eichengreen Barry and Jeffry Frieden The Political Economy of EMU, 2000 (MyCourses); Fischer, Stanley, Exchange Rate Systems, Surveillance, and Advice, IMF Staff Papers 55 (3), 2008: 367-383 (MyCourses) Poli 445 Fall 2017 4
Lecture 20 (Nov. 20): The United States -- leader or source of trouble?: Obstfeld, Maurice, America s Deficit, the World s Problem, Monetary and Economic Studies, October 2005, 25-35 (MyCourses); Henning, C. Randall, The Exchange Rate Weapon and Macroeconomic Conflict, in International Monetary Power, ed. by David M. Andrews, Ithaca: Cornell UP, 2005 (MyCourses) Lecture 21 (Nov. 22): The Recent Financial Meltdown: Krugman, Paul, CRISES, Nobel Lecture, 2010 (MyCourses); Eichengreen, Barry, The Crisis and the Euro, 2009 (MyCourses) Lecture 22 (Nov. 27): Rival Currencies in the Future?: Eichengreen, Barry, The Euro as a Reserve Currency, 1997 (MyCourses); Cooper, Richard N., Key Currencies After the Euro, 1997 (MyCourses); Frieden, Jeffry, The Political Economy of the Euro as an International Currency, in The Euro as Stabilizer in the International Economic System, ed. by A. Clesse and R. Mundell, Kluwer, 2000, 203-213 (My- Courses); Eichengreen, Barry, Sterling s Past, Dollar s Future: Historical Perspectives on Reserve Currency Competition, 2005 (MyCourses) Lecture 23 (Nov. 29): Evaluating Varied Responses to the Financial Meltdown: Eichengreen, Barry, The Global Credit Crisis as History, 2009 (MyCourses) Lecture 24 (Dec. 4): Contemporary Exchange Rates Policies: Morrison, Wayne and Marc Labonte, China s Holdings of U.S. Securities: Implications for the U.S. Economy, Congressional Research Service 2011 (MyCourses); Helleiner, Eric, Political determinants of the international currencies: What future for the US Dollar?, Review of International Political Economy 15 (3), August 2008, 354-378 (JSTOR) Lecture 25 (Dec. 6): Conclusions -- The Possibility of Reform: Obstfeld, Maurice, Lenders of Last Resort in a Globalized World, Monetary and Economic Studies, November 2009, 35-52 (MyCourses); Frieden, Jeffry, Global Governance of Global Monetary Relations: Rationale and Feasability, Economics 3 2009-6 (MyCourses) Poli 445 Fall 2017 5