• Unit 4: International Macroeconomic Policy

    In the previous unit, we saw how a country can use monetary, fiscal, and exchange rate policy to change the levels of employment and production within its borders. The inherent independence of open national economies has sometimes made it more difficult for governments to achieve such policy goals as low unemployment and stable prices. The channels of independence depend, in turn, on the monetary and exchange rate arrangements that are adopted by countries and are collectively known as the international monetary system.

    In this unit, we will examine how the international monetary system influences macroeconomic policy-making and performance. We will also apply models of fixed and floating exchange rates to examine the recent performance of floating rates and to compare the macroeconomic policy problems of different exchange rate regimes. Then, we will study the role that international trade plays in both developing countries and economies transitioning from a central planning system to a market-based one.

    Completing this unit should take you approximately 19 hours.

    • 4.1: The International Monetary System, 1870–1973

    • 4.2: Macroeconomic Policy and Coordination under Floating Exchange Rates

    • 4.3: Optimum Currency Areas and the European Experience

    • 4.4: The Global Capital Market: Performance and Policy Problems

    • 4.5: Developing Countries: Growth, Crisis, and Reform