Foundations II Power Points Hesse

Question 1

The tripartite agreement of 1936

Answer 1

France leaves GS in 36. Franc -30%
The 3 peg in 36 to trade n blabla.
US back to 1oz gold:35$

Question 2

Lend-lease contract of 1941

Answer 2

UK can’t pay.
No more credit allowed
Leases are given
UK sells foreign property in return.
30B$ until end of war

Question 3

What happened right after the war?

Answer 3

High inflation BC of dollar influx
Dollar gap was seen as pressing

Question 4

Three pillars of the Bretton Woods system

Answer 4

IMF
IBRD
ITO–>GATT

Question 5

Deposit of the IMF

Answer 5

8.8 bn $

Question 6

How should contributions to the IMF be?

Answer 6

25% gold/gold convertible
75% domestic currency

Question 7

Peg system in BWS

Answer 7

Peg to dollar
+/- 1% deviation

Question 8

Keynes’ critique

Answer 8

USD receives too strong position
Surplus countries have no incentive to adjust

Keynes’ plan
Clearing Union in London.
New international currency(bancor) for balancing monetary flows

Question 9

Adjustment mechanism of the IMF

Answer 9

Up to 10% in case of fundamental imbalances

Question 10

Pre convertibility period

Answer 10

1944- 1958

Question 11

Heyday of BWS

Answer 11

1958-1971
Minor adjustments was seen as efficient
Relative price stability+ high growth rates
Imported inflation tho

Question 12

Triffin paradox

Answer 12

Foreign dollars>domestic –> lost trust in convertibility
CBanks sold gold

Question 13

Tow-tier agreement of 1968

Answer 13

Split into
Currency gold (35 an Oz)
Free gold(45 an Oz)

Question 14

Effects of WWII

Answer 14

Loss of physical capital+ 63M lives
Trading blocks interrupted
Regional trade collapsed

Question 15

Liberal consensus of WWII period

Answer 15

US turned from protectionist to Free trade
Reduction of tariffs
AVG us tariffs in 1945 33%, in 1950 13%

Question 16

GB

Answer 16

Turned more protectionist
Aimed at conserving commonwealth preferences.

However supported the liberal consensus, e.g. Atlantic charts 1941

Question 17

Bilateralism Vs multilateralism

Answer 17

US & UK had different approaches.
ITO suggested
Multilateralism fails
Club approach with GATT & 18/23 states starts.

Question 18

Objectives of GATT treaty 1947

Answer 18

“Raising standard of living”

Reduction of barriers to trade

Import quotas outlawed except agriculture & fish

Exceptions for poor countries

No reciprocity expected from devng countries