Wealth and Poverty: Governance of Finance

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  • Created by: becky.65
  • Created on: 25-11-19 15:48
What is the gold standard?
The late c19 and c20 system through which all trading relationships were regulated through the movement of gold from importing countries to exporting countries. In theory this was supposed to lead to automatic adjustment in imports and exports
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What was the negative impact of imbalances in the gold standard?
It was very painful for low income groups who were forced to adjust because they didn't have the vote, so many lost their jobs
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What do IPE scholars believe the great depression was caused by?
Beggar-thy-neighbour trade policies whereby they kept trade barriers high to try and keep neighbours economies low, but this didn't work
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What was the vision of "Embedded Liberalism" that happened after WWII?
A liberal and multilateral international economic order. There was a need to reconcile international openness that should be managed by governments. Compromised needed between safeguarding domestic policies and international trade
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What was Bretton Woods?
The regulatory system introduced at the end of WWII in an attempt to bring stability to those elements of the world economy under the US sphere of influence
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What was the objective of Bretton Woods?
Provide sufficient policy space within domestic economies for governments to intervene in the interests of ensuring full employment
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What was the IMF established as?
To ensure a stable exchange rate regime and to provide emergency assistance if countries faced balance of payment crises
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What was the World Bank established as?
To facilitate private investment and development
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What was the Bretton Woods policy for exchange rates?
Currencies were fixed to a gold-dollar standard but governments have policy autonomy whereby they have the right to control capital movements
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How did the IMF manage international economic imbalances?
They had a mandate to provide governments with short-term loans when they had balance of payments problems
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How did the World Bank manage international economic imbalances?
It was designed to provide and encourage long term loans for reconstruction and development
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When was the Golden Age of Bretton Woods?
1945 - 1971
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Why did pressures start to build on Bretton Woods?
Currency Imbalances were building and the government didn't want to ask the IMF to adjust their exchange rates and the gold-dollar peg grew unsustainable, the only way to expand international liquidity was when the US provided more dollars
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When did Nixon take the US off of gold standard?
1971
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Why did realists think that Nixon took the US off of gold standard?
To increase their own freedom; the US can so they will
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How did institutionalists react to Nixon taking the US off of gold standard?
They thought the international monetary regime could survive without the US
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How did constructivists react to Nixon taking the US off of gold standard?
They emphasised the growing idea that floating exchange rate can work
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What is stagflation?
Slow economic growth with high inflation rates
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What did stagflation result in?
For conservative governments in the US and UK it showed that the BW model was finished, there was a move against government intervention in the economy and the belief that markets could be better
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What happened as a result of the neoliberal counter-revolution?
UK and US economies underwent dramatic transformations. There was trade liberalisation, deregulation and privatisation
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When did the Federal Reserve raise interest rates and why?
1979 to stem inflation
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What happened as a result of increased interest rates?
Governments found themselves with debt they could not pay overnight so the IMF helped by stopping governments defaulting on their debts
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What has happened as a result of the growing mixed views on capital controls today?
There can be huge spikes of trade in and out, so it needs to be managed so there are not crises, but the number of crises has grown dramatically. These are exacerbated by "capital flight" - citizens take money outside of their country in crisis
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Which countries suffered less in 2008?
Those that maintained capital controls
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Today, which economic flow is greatest?
Financial flow
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What do financial markets rest on?
Political decisions as governments create institutional frameworks within which globalised markets operate
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Other cards in this set

Card 2

Front

What was the negative impact of imbalances in the gold standard?

Back

It was very painful for low income groups who were forced to adjust because they didn't have the vote, so many lost their jobs

Card 3

Front

What do IPE scholars believe the great depression was caused by?

Back

Preview of the front of card 3

Card 4

Front

What was the vision of "Embedded Liberalism" that happened after WWII?

Back

Preview of the front of card 4

Card 5

Front

What was Bretton Woods?

Back

Preview of the front of card 5
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