IMF Chapter 14

Question 1

What is International Policy coordination about?

Answer 1

Cooperative Relationship between policy makers of two or more nations

Question 2

What are the three types of policy coordination?

Answer 2

Exchange of information, acceptance of mutually consistent policies and joint action

Question 3

What does exchange of information allow?

Answer 3

This allows authorities to pursue mutually compatible target values and adjust the selection of policy instruments, their magnitude and timing to avoid conflict with other countries

Question 4

What is join action?

Answer 4

This works by agreement for a achievement of a rate

Question 5

What does the exchange of information entail?

Answer 5

They discuss the appropriate value of the exchange rate and more macroeconomic policies and intentions

Question 6

What are the advantages of policy coordination?

Answer 6

1. Benefit from a certain policy if all countries implement it
2. Gaines from trade and international markets
3. Less uncertainty
4. May avoid excessive deflation

Question 7

What are the disadvantages of policy coordination?

Answer 7

1. Difficult to negotiate
2. Cheating
3. Adequately compensate the losers of a particular policy line

Question 8

What are the Major obstacles of greater international macroeconomic policy coordination?

Answer 8

1. Negation and reduced flexibility costs
2. Disagreement over appropriate macroeconomic policies
3. Not all countries gain from coordination
4. Reneging and the problem of time consistency

Question 9

What does the Hamada diagram show?

Answer 9

Benefits of coordination

Question 10

What are spillovers?

Answer 10

Countries policies and economic decisions affect each other