Printer Friendly

Political Economy and International Money: Selected Essays of John Williamson.

THIS BOOK is a collection of essays written by John Williamson (known for the phrase "crawling peg") on international monetary economics. The first essay provides some background on the historical evolution of economic theory and policy with regard to international monetary economics during the postwar period. However, the survey of background work assumes the reader is indeed versed in international economics at a reasonably sophisticated level. The second essay discusses Keynes' International Economic Order (Bretton Woods) for which Williamson suggests the period of the 1950s to 1973 exemplified prosperity and success. The author argues that both microeconomic liberalism and macroeconomic management are needed in order to restore a new international order. Any attempt to foster global macroeconomic management necessitates an agreed-upon exchange rate regime as well as rules for monetary control.

The third essay focuses upon both academic and policy orientations to a "crawling peg" followed up with situations in which a crawling peg was adopted. The fourth essay, in providing a survey of the literature on the optimal peg, addresses the question of choosing an optimal peg, notably what should developing countries peg. Both of these essays provide lucid discussions and perhaps a quick reference for the practicing international economist.

Essay five discusses the evolution of the SDR (Special Drawing Rights) and appropriate definition and measurement of international liquidity. Williamson advocates SDR allocation to remedy the reserve shortage affecting capital-importing developing countries, penal interest rates or SDR use beyond a limit, and the establishment of an SDR clearinghouse. An SDR clearinghouse would process transactions among commercial banks and permit transfers of SDRs between official and private sectors, in turn providing the SDR to be used in intervention. The sixth essay addresses the growth of official international reserves and world monetary control. The author recognizes that a coordinated world monetary policy, with respect to the world money supply expanding at an adequate rate, cannot be achieved via collective control of the volume of world reserves. An alternative proposal of targets for credit creation in participating countries is entertained. The seventh essay is a survey of the structure of the international monetary system and real resource transfers to LDCs. Notably, Williamson proposes a number of reforms to the international monetary system that could promote resource transfers to LDCs. In the eighth essay Williamson argues there is overall interest on the behalf of all concerned parties in lengthening the maturity structure of the debt of LDCs. The proposal rests upon fostering an international financial institution to act as an agent for developing countries in floating long-term indexed bonds. The focus is to enable LDCs to undertake borrowing of long-term maturities without encountering substantial costs and risks.

Within the ninth essay Williamson discusses the purposes of an international monetary system then ponders different standards, namely, a SDR versus dollar standard. The tenth essay establishes an agenda of international monetary reform for the 1980s. The agenda includes coordinated macroeconomic policy, minimization of exchange rate misalignments, real resource transfers, increase in compensatory financing and promotion of the SDR. Indeed, the tenth essay seems to summarize Williamson's views on a new international economic order.

Finally, an overall discussion on domestic and global economic policy is addressed in the last three essays. In the eleventh essay Williamson summarizes the various schools of thought related to macroeconomics, concluding that microeconomic liberalism and macroeconomic management are needed. Following this more general discussion of economic policy, a relatively technical essay on the problem of indexation is presented. Williamson argues that a discriminating use of indexation as a component of some incomes policy may not perpetuate an inflationary environment. The book closes with an essay on global macroeconomic strategy. This essay was written during the 1982 recession, thus begging the question, or better yet the need for, a global economic strategy.

Professor Williamson is well known in Europe as his name is often mentioned in conjunction with European Community monetary reform. NABE members seeking insights into 1992 developments should be aware of the ideas presented in this book. James E. Payne Oakland University
COPYRIGHT 1990 The National Association for Business Economists
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Payne, James E.
Publication:Business Economics
Article Type:Book Review
Date:Jul 1, 1990
Previous Article:The statistics corner: a brief look at Bush's statistics budget.
Next Article:Joseph A. Livingston.

Terms of use | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters