POLI 445 Lecture Notes - Lecture 3: Floating Exchange Rate, Arbitrage, Hegemonic Stability Theory

• School: McGill University
• Department: Political Science
• Course: POLI 445
• Professor: Mark Brawley

Document Summary

This looks at the economic distribution of interests. It depends what you do when you try to implement it: fixing your exchange rate means you tie your currency to your trading partners. If you"re floating, and you prefer depreciation - that"s an interaction on the markets: whether you"re able to make that an effective policy depends on the actions of others. Will there be cooperation at the intl level: al: find like-minded partners, you need to look at the bottom-up reasons for domestic policy adoption in other countries. Find partners that will cooperate with you to make your policies effective /more effective: r: hegemonic stability theory. Answer to fixing in floating exchange rate depends on what the dominant power wants. If the policymakers tell you that you won"t be able to make your policies work o(cid:448)er ti(cid:373)e, the(cid:374) it (cid:449)ill affect your decisio(cid:374)s.