01:790:358 Chapter Notes - Chapter 5-8: Dani Rodrik, Washington Consensus, Financial Transaction
8 Jan 2019
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Document Summary
The bretton wood consensus agreed that captial controls were necessary to keep financial stability. There was clear distinction between the domestic goals of a country and international sphere of finance. Which is why countries were given policy space to develop adequate domestic economic policies. Bretton woods was designed for countries to participate in the global financial market without compromising their domestic goals. As bretton woods era began to fade, keynesian policies were outdated, and the imf consensus of free capital mobility and removal of governmental controls became popular, soon fixed exchange rates and capital controls were gone. The imf was a strong supporter of benefits free capital mobility and encouraged countries to open their markets. Yet, the economic crisis which happened in latin. America, europe, and the us, are all indicative of the problematic set up of finical markets which rely on hyper globalization. Banking crisis were produced by free captial mobilities but where happening at a global scale.
