Global Economic Leadership and the Group of Seven

Global Economic Leadership and the Group of Seven

by C. Fred Bergsten, C. Randall Henning
     
 

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ISBN-10: 0881322180

ISBN-13: 9780881322187

Pub. Date: 01/28/1996

Publisher: Peterson Institute for International Economics

Sluggish global growth, frequent currency crises, huge trade imbalances and the Mexican financial collapse all reveal the failure of the Group of Seven industrial nations to provide effective leadership of the world economy. The G-7 has played this role effectively in the past and must do so again to assure global prosperity.

Part of the G-7's decline is due to

Overview

Sluggish global growth, frequent currency crises, huge trade imbalances and the Mexican financial collapse all reveal the failure of the Group of Seven industrial nations to provide effective leadership of the world economy. The G-7 has played this role effectively in the past and must do so again to assure global prosperity.

Part of the G-7's decline is due to continuing policy differences among the United States, Germany, and Japan. The bigger problem, however, is a new "consensus for inaction" based on fears of trying to counter the huge flows of international private capital, the existence of large budget deficits everywhere, and the resistance of central banks to coordination by anyone.

The study offers a comprehensive analysis of all these changes in the world economy and reaches a much more optimistic reading of the prospects for effective G-7 leadership. It proposes an action program that includes reforming the exchange rate regime, instituting an early warning system to prevent new monetary crises, augmenting the resources of the IMF to deal with private capital flows, and institutional reform of the G-7 itself.

Product Details

ISBN-13:
9780881322187
Publisher:
Peterson Institute for International Economics
Publication date:
01/28/1996
Edition description:
New Edition
Pages:
167
Product dimensions:
6.11(w) x 9.17(h) x 0.41(d)

Table of Contents

Prefacexi
Acknowledgmentsxv
1Summary and Conclusions1
2The Role and Record of the G-713
The G-7 as an Institution13
The Responsibilities of the G-715
Past Successes20
3The Decline of the G-727
World Growth and Stability27
Exchange Rates30
International Imbalances34
External Relations35
The International Economic System39
The Legitimacy of the G-743
The Bottom Line49
4The Sources of G-7 Decline: Traditional Tensions55
Growth vs. Stability55
Surplus vs. Deficit Countries59
Globalism vs. Regionalism68
The Politics of the G-773
A Summing Up80
5The Sources of G-7 Decline: The New Consensus83
The Immobilization of Fiscal Policy86
The Primacy of the Central Banks87
The Growth and Spread of Private Capital Flows89
The Downgrading of the IMF91
The Abdication of Responsibility92
6Reviving the G-797
Resolving the Traditional Differences97
Immobilization of Fiscal Policy and Coordination of Monetary Policy100
The Role of the Central Banks109
Coping with Private Capital Movements112
The Bureaucratic Politics of Monetary Reform117
A Summing Up120
7An Action Program123
A New Exchange Rate Regime124
Avoiding "Future Mexicos"134
Enhancing the Legitimacy of the G-7138
Conclusion140
Appendix AInternational Economic Coordination143
References149
Index158
Boxes
Box 1.1International Economic Organizations2
Box 2.1The Three Groups16
Box 2.2The General Arrangements to Borrow22
Tables
Table 3.1aG-7 share of world merchandise exports, 1950-9445
Table 3.1bG-7 share of world merchandise imports, 1950-9445
Table 3.2Share of G-5 currencies in world foreign exchange reserves, 1973-9446
Table 3.3Shares of major currencies in world private transactions46
Table 3.4G-7 share of total international monetary reserves, 1973-9547
Table 3.5G-7 share of total IMF quotas, 1950-9547
Table 7.1G-7 performance on proposed cooperation criteria, 1995-97132
Figures
Figure 2.1G-7 share of gross world output, 1960-9417
Figure 3.1Yen per dollar, 4 January 1988 through 22 April 199631
Figure 3.2Monthly real trade-weighted dollar exchange rate against 101 trading partners, January 1988-December 199549
Figure 3.3Monthly real trade-weighted dollar exchange rate versus other G-7 countries, January 1988-November 199550
Figure 4.1United States: current account and merchandise trade balance, 1970-9560
Figure 4.2Germany: current account and merchandise trade balance, 1970-9560
Figure 4.3Japan: current account and merchandise trade balance, 1970-9561
Figure 4.4United Kingdom: current account and merchandise trade balance, 1970-9561
Figure 4.5France: current account and merchandise trade balance, 1970-9562
Figure 4.6Italy: current account and merchandise trade balance, 1970-9562
Figure 4.7EU, Japan, and US: trade in goods and services, 1960-9464
Figure 4.8Current account surpluses by country share, 199466
Figure 7.1Deutsche marks per dollar, 4 January 1988 through 22 April 1996125

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