100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary Weeks 1-3 Bearce - Societal preferences, partisan agents, and monetary policy outcomes $5.49
Add to cart

Summary

Summary Weeks 1-3 Bearce - Societal preferences, partisan agents, and monetary policy outcomes

 83 views  0 purchase
  • Course
  • Institution

A summary and note page of the important points from the readings

Preview 1 out of 2  pages

  • October 1, 2018
  • 2
  • 2018/2019
  • Summary
avatar-seller
Mundell-Fleming framework:
-posits that with international capital mobility govs must choose between monetary policy
autonomy and Exchange rate (ER) stability.
If govs wish to stabilize ERs then they must move national interest rates in line with the
prevailing world int. rate this is called monetary convergence. If national IRs diverge from
world capital flows will put pressure on ERs leading to currency instability.
-Frieden posited that inter. Oriented producers prefer monetary convergence for ER stability,
domestically oriented prefer monetary autonomy, accepting costs of greater ER instability.

-lack of evidence of societal lobbying of policymakers.
-posits party-as-agent framework where parties represent domestic interest groups. This is
consistent with findings that size of interest group and its power does not matter if their party is
not in power. Suggests that societal lobbying is costly and so lobbying for ER stability and
competitiveness likely when right-govs not working towards this objective.

Societal preferences: which groups matter?
-Economic sectors: capital and labour in a given sector expected to unite, import-competing
producers and producers of nontradeable services hold preferences for national monetary
autonomy, export-oriented and international investors prefer monetary convergence because
currency movements may negatively affect their cross-border business activities. Banks have
been rendered insolvent by volatility, stability is safer for banks and better profit prospects under
monetary convergence and capital mobility.
-Production factors:
-Heckscher -Ohlin model, factors of production can move without cost across sectors and so
factor returns become equalized across sectors of economy. Capital and labour have divergent
interests regarding national economic policy. Capital not tied with local economy and thus may
have little interest in monetary autonomy, can be expected to value of monetary convergence so
far as it facilitates free movement of money. Labour is tied to local economy and thus should
have strong interest in maintaining domestic monetary autonomy.

How do societal preferences matter?:
-economic pluralism: govs will make greater efforts to stabilize Ers as international trade and
investment grow, reflecting growing influence of exporters and international investors.
-state is a weak actor in this model, gov processes societal imputes into output that is policy. Gov
said to have little interest in policy itself.
-one issue of this model is that large societal groups face collective action problems, it could
even be thought that smaller groups could be more effective in obtaining their preferred
monetary or ER outcomes.
-political party as solution to this collective action problem.

-party-as-agent framework: partisan character of gov in power may be more important than
group size.
-principle-agent arrangement, in western countries often ideological political parties. Part not just
vote-maximizing but care about policy outcomes of their core supporters. Class line
identification of parties, leftist for labour and rightist for capital. Also, evidence to support
sectoral partisan affiliations.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller madman18. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $5.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

52510 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$5.49
  • (0)
Add to cart
Added