Webb: International Economic Structures, Government Interests and International Coordination of Macroeconomic Adjustment Policies

Webb, MC. 1991. International economic structures, government interests, and international coordination of macroeconomic adjustment policies. International Organization: 309-342.

How does increased capital mobility effect domestic macroeconomic policy coordination measures? "When different countries pursue different macroeconomic policies, it is likely that external payments imbalances, exchange rate movements, or both will result. A number of different types of policy could be used to reconcile national macroeconomic objectives with international constraints imposed by the resulting payments imbalances or exchange rate movements...Three categories of policies are relevant" (314).

External Policies: manipulation of trade and capital controls; Symptom Management: intervention in markets to control them through reserve spending, etc; Internal Policies: adjustment of domestic imbalances between savings and consumption through fiscal and monetary intervention.

See Table 4 (338) for an overview of how different policy coordination measures changed from the 60s to the 80s.

"This article demonstrates that international coordination of macroeconomic adjustment policies was at least as extensive in the 1980s as it had been in the 1960s. Because of changes in the structure o the international economy, however, there were shifts in the pattern of policy coordination: in the 1980s, payments financing coordination was less extensive, capital controls coordination was more extensive, exchange rate coordination was as extensively pursued...and, most important, monetary and fiscal policies became the focus of coordination efforts. The pattern of the 1980s reflects the fact that when international capital mobility is high, the plight of a country facing serious external imbalances can be resolved only by adjustments to monetary and fiscal policies-either those of its own government or those of the governments of other leading countries" (340).