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Lee Hoskins - Correcting International Imbalances","","International developments are shown as a growing factor in monetary policy decisions worldwide, reflecting heightened interdependence among nations and large trade and capital flows. The text argues that persistent international trade imbalances require monetary policy support for price stability, both in the United States and abroad. It describes 1985–1987 exchange-rate pressures, interventions by Germany, Japan, Canada, and the United Kingdom, and resulting shifts in money growth and domestic demand. 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Other countries like Canada and the United Kingdom also intervened and saw accelerating money growth rates.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},324418,1790432613,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":52,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},7971461741311,"https://ap-avatar.wpscdn.com/avatar/74000253aff267980c6?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779345379180704826","# International\n\nDevelopments andMonetary Policy  \nby W.Lee Hoskins  \nIntemational considerations have  \ntaken on a more promnent rolerecently in economic policy decisionsaround the world.Partly this reflectsthe growing interdependence andopenness among nations,character-ized by large trade and capital flowsItalso reflects the problems of the day,particularly the serious internationalimbalances that currently exist.  \nWe now seem to be on a path towardsredressing the global trade imbalances.A long journey remains,and the con-ditions that will be in place when wereach our destination will depend onthe policy choices we make today.Isense an increasing uneasiness infinancial markets about policymakers'willingness to maintain the progressthey have made towards achievingprice stability.This uneasiness doesnot stem as much from recent price ormoney growth trends,as from a sensethat future economic policies will notbe adequate to manage the difficulttransition ahead.Central banks con-tinue to establish multiple objectivesfor monetary policy and to alter theimportance they attach to each.  \nWhat is the appropriate role for monetary policy in an international context?I believe that an emphasis on pricestability both in the United States andabroad not only could reduce priceuncertainty,but could also keep us onthe desired path of adjustment in ourinternational accounts.  \n## ■ Correcting InternationalImbalances\n\nBy late 1985,the exchange marketbegan to view trends in global tradeimbalances and existing exchange-rateconfigurations as unsustainable.Protectionist sentiments were growing.and the dollar had begun to depreciate.The standard textbook remedyto global trade imbalances relies onexpenditure-adjustment policies inboth deficit and surplus countries andon exchange-rate management.  \nDomestic expenditure patterns beganto adjust in late 1985,but the marketdid not view these adjustments asproceeding quickly enough,andcompletely enough,to obviate a sharprealignment in dollar exchange rates.By mid-1986,Germany and Japanbecame increasingly concerned aboutthe impact that the dollar's rapiddepreciation could have on theireconomies.Exports were an important source of economic growth inboth countries.By mid-1986,Germany  \nPolicy choices we make today canstrongly influence the process bywhich trade imbalances will adjust.The most desirable path for reform-ing our international accounts andfor creating a healthy economicenvironment requires the use ofmonetary policy to promote pricestability in the United States andabroad.  \nand Japan were intervening inexchange-rate markets—at times invery large amounts—to slow the dol-lar's depreciation.  \nOne result was an acceleration in thegrowth of their money supplies in1986 and 1987.For example,central-bank money in Germany grew atnearly an 8 percent annual rate in1986 and 1987 compared to uppertargets of 5.5 percent and 6.0 percentin these years respectively.Moneygrowth(M2&CDs)in Japan acceler-ated from an 8 percent annual growthrate in late 1985 to approximately 11percent late in 1987.  \nOther countries,notably Canada andthe United Kingdom,also intervenedto slow the dollar's decline and con-sequently experienced acceleratingmoney growth rates.Meanwhile,inthe United Statesmoney(M1)grewrapidly in 1985 and 1986,well abovetarget,before slowing in 1987.  \n■ On the Path of AdjustmentTo date,the effect of these policieshas been to put us on the path toadjustment.The dollar now standsapproximately at its 1980 level,beforeour serious trade balance problemsbeganReal net exports in the UnitedStates have begun to adjust,as havereal net exports in Germany andJapan.Domestic demand in many for-eign countries,especially in Japan,hasimproved.Given the stimulative poli-cies undertaken to date,not only areforeign economies likely to continueexpanding,but growth probably willaccelerate.The IMF's recent WorldEconomic Outlook shows domesticdemand in most foreign countriesgrowing as the export sector slows,and maintaining ov","cbCaibJAA4PPmzX2","https://ap.wps.com/l/cbCaibJAA4PPmzX2","pdf",1077484,"English","# International\n# Correcting International Imbalances\n# On the Path of Adjustment\n# Price Uncertainties","[{\"question\":\"Why do international considerations matter more in economic policy decisions?\",\"answer\":\"The document links this rise to growing interdependence and openness among nations, large trade and capital flows, and the serious international imbalances that exist.\"},{\"question\":\"What role does monetary policy play in addressing international trade imbalances?\",\"answer\":\"It argues for using monetary policy to promote price stability in the United States and abroad to support a desirable path of adjustment in international accounts.\"},{\"question\":\"How did exchange-rate interventions relate to money growth in 1986–1987?\",\"answer\":\"Germany and Japan intervened to slow the dollar’s depreciation, and the text reports that this coincided with faster money-supply growth. Other countries like Canada and the United Kingdom also intervened and saw accelerating money growth rates.\"}]","International Developments and Monetary Policy - By W. Lee Hoskins - Correcting International Imbalances | PDF",1789967862,13]