Handbook of Safeguarding Global Financial Stability

Chapter 8

The Political Economy of International Monetary Policy Coordination

J.A. Frieden* and J.L. Broz^†

^*Harvard University, Cambridge, MA, USA

^†University of California, San Diego, CA, USA

Outline

Introduction

The Potential Gains from International Coordination

The Problem: Exchange Rate Externalities

Exchange Rate Coordination: Motivation and Modalities

Conclusion

Glossary

Further Reading

Introduction

Exchange rates have been the focus of a great deal of international attention over the past two decades. Spectacular currency crises in emerging markets have thrown whole regions into economic and political turmoil. Major countries have accused one another of purposely manipulating their currencies, leading to acrimonious disputes that implicate ...