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International Policy Coordination and Exchange Rate Fluctuations

Since the five largest industrial democracies concluded the Plaza Agreement in 1985, the theory and practice of international economic policy coordination has become the subject of spirited academic and public-policy debate. While some view policy coordination as crucial for the construction of an improved international monetary system, others fear that it risks delaying or weakening the implementation of macroeconomic and structural policies.

In these papers and comments, prominent international economists consider past and present interpretations of the meaning of international policy coordination; conditions necessary for coordination to be beneficial both to the direct participants and the global economy; influential factors for the quantitative impact of coordination; obstacles to coordination; the most—and least—effective methods of coordination; and future directions of the coordination process, including processes associated with greater fixity of exchange rates.

These studies will be readily accessible to policymakers, while offering sophisticated analyses to interested scholars of the global economy.

Table of Contents

William H. Branson, Jacob A. Frenkel, and Morris Goldstein
1. The Rationale for, and Effects of, International Economic Policy Coordination
Jacob A. Frenkel, Morris Goldstein, and Paul R. Masson
Comment: Martin Feldstein
Comment: William H. Branson
2. The Coordination of Macroeconomic Policies
Peter B. Kenen
Comment: Richard N. Cooper
Comment: Stanley Fischer
3. Obstacles to Coordination, and a Consideration of Two Proposals to Overcome Them: International Nominal Targeting (INT) and the Hosomi Fund
Jeffrey A. Frankel
Comment: Ralph C. Bryant
Comment: Douglas D. Purvis
4. Equilibrium Exchange Rates
Paul R. Krugman
Comment: C. Fred Bergsten
Comment: Michael Mussa
5. The Effectiveness of Foreign-Exchange Intervention: Recent Experience, 1985-1988
Maurice Obstfeld
Comment: J. S. Flemming
Comment: Hans Genberg
Comment: Shuntaro Namba
6. Can the European Monetary System be Copied Outside Europe? Lessons from Ten Years of Monetary Policy Coordination in Europe
Francesco Giavazzi and Alberto Giovannini
Comment: Richard C. Marston
Comment: Wolfgang Rieke
7. The Case for International Coordination of Financial Policy
David Folkerts-Landau
Comment: Francesco Papadia
8. Multinational Corporations, Exchange Rates, and Direct Investment
Kenneth A. Froot
Comment: Geoffrey Carliner
Comment: J. S. Fleming
9. Adequacy of International Transactions and Position Data for Policy Coordination
Lois Stekler
List of Contributors
Author Index
Subject Index

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