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22 Cards in this Set
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keynesianism
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system of thought that subscribes to counter cyclical demand spending as a way to solve recessions.
orthodoxy says when wages get low new investments will occur, but Keynes saw that this investment depends on expectations of others. • Keynes saw that no individual capitalist would expand his factory if there was little prospect for new products, no matter how low wages or interest rates went. If all capitalists think this way, that demand will stay low, then factories will stay idle and workers will stay unemployed. • Aggregate Demand: sum of all investment and consumption made by consumers producers and gov. |
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monetarism
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1979 Volcker says going monetarism, inflation fighter. control money supply and not raise interest rates like after OPEC. popular theory went from Keynesian to Monetarism.
is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over longer periods and that objectives of monetary policy are best met by targeting the growth rate of the money supply |
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anti inflationary bias
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example Volcker’s policies combating inflation at all cost.
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supply side econ
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anything that contributes to supply rather than demand in market. aggregate supply??
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asian financial crisis
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period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion.
The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support its fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt. |
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deregulation
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gov reduces role and allows ind greater freedom in their operations.
dereg in structural reforms of MX led to reduction of fiscal deficits, lowered inflation and led MX to peso crisis of 94. |
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privatization
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allow private corps to run markets. gov sold off businesses and revised their control of private corps, cut gov share of econ covered by tight regulatory controls. contributed to global econ integration, corps were able to practice free trade without intereference.
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washinton consensus
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in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department. The prescriptions encompassed policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.
Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP; Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment; Tax reform, broadening the tax base and adopting moderate marginal tax rates; Interest rates that are market determined and positive (but moderate) in real terms; Competitive exchange rates; Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs; Liberalization of inward foreign direct investment; Privatization of state enterprises; Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions; Legal security for property rights. |
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casino capitalism
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Telecommunications and technology made it easier and faster to move money around the world and harder for government to control these flows. Modern telecommunications sped access to offshore markets.
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market oriented orthodoxy
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google....
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info standard
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- Walter Wriston of Citibank, perhaps the most powerful international banker of the 1980s, saw the new capital mobility and telecommunication as part of the evolution of an "information standard"that
- allowed markets to monitor governments - The gold standard, replaced by the gold exchange standard, replaced by the Bretton Woods arrangements, has now been replaced by this. - Money goes where it’s wanted, stays where it’s well treated, and once you tie the world together with telecommunications and info, the ball game is over. put pressure on gov for more intl econ integration and be policy friendly to intl investors. - information standard more harsh than the Gold standard. - gold standard: renounce it, we proved that - info standard: can’t renounce, exerting a discipline on the countries of the world - RESULT: to give international investors enormous influence over gov’t and their policies |
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george soros
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Soros is a Hungarian-American invest fund manager/ international financier and speculative investor representing today's global age. He had been attacked by Prime Minister Mahathir of Malaysia for promoting global capitalism/currency trading and speculative attacks which can harm unprotected developing nations. In 1979 Soros began to spend money to help undermine Communist governments and promote democracy in Eastern Europe. Moreover, in 1992, Soros bet billions of dollars against the British government and won. This event was significant because it bolstered the notion that the governments are under massive pressure to satisfy international investors even if the domestic political costs are high. Moreover, this event illustrates the extent of economic globalization and its effect on governments and policymakers. In 1979 Soros began to spend money to help undermine Communist governments and promote democracy in Eastern Europe. By the end of the twentieth century, Soros represented both the achievements and the anxieties of international finance. great achievement of the time, more money, but now you need to listen to adivsers and people were worried about the new status of the world econ
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open society institute
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private grantgivers. aims to shape public policy to promote democracy, human rights, econ/legal/social reform. est by soros to support his foundations in E adn cetnral EU and soviet union to help get away from communism.
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NAFTA
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north american free trade agreement. made to maintain order for when treaties are made. hard to break. MX joined to be more credible for foreign investors. this treaty solidificed that MX leave ISI and adopt upward development strategy by tie to US.
MX in nafta before peso crisis. at same time as nafta there was a south am trade bloc. |
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European Union
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an economic and political union or confederation[10][11] of 27member states which are located primarily in Europe.[12] The EU traces its origins from the European Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed by six countries in 1958. In the intervening years the EU has grown in size by the accession of new member states and in power by the addition of policy areas to its remit. The Maastricht Treaty established the European Union under its current name in 1993. The latest amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009.
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export oriented ind
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high export volumes of CA. gov policies promote exports, gov invests in education, high savings and capital invest, stable poli system.
• South Korea is poorly endowed with all but unskilled labor. Thus industices with CA in unskilled labor were promoted and market conditions then chose which industries the gov should support. • South Korea boom: during 6/70s, growth was rapid. Went from being agricultre dominant to manufactured good dominant. |
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asian tigers
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reference to asian countries such as hong kong, singapore, south korea and taiwan, who maintained exceptionally high growth rates and intense industrialization as a result of the adoption of export oriented industrialization based on each country’s comparative advantage. south korea is the most detailed example of an asian tiger country that we did in class, essentially forcing growth and changing the country’s comparative advantage through education and technological innovation.
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fernando henrique cardoso
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finance minister of brazil 1993, went against BZ mainstream, semi marxist, development. thought third world could develop. argued against the idea that imperialism ruined the land and socialism wasn't the only option.
in 93 when he took office BZ was a mess, hyperinflation of two thousand percent, and manufacture prouction dropped and trade was stagnant. real plan, new currency pegged to dollar. success. impsoed austerity. with euphoria from this plan he was elected pres of brazil. embraced intl trade. part of evol of intl labor |
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kenneth kaunda
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president of zambia after indep, copper belt, but copper price rose after indep. but then weakened. low price meant corps had to restrain wages but labor tried to fight with their unions. revenues fell and gov needed revenue but little competition so no.
he was kicked out of office. started same time as South Korea, SK did better. |
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resource curse
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easy availability of natural resources at initial colonization stunted institutional development; bad institutions = stunted economic growth in the future
- There is a negative relationship between primary product exports and economic growth. This is a downward sloping graph. Paradoxically, countries with lots of valuable natural resources are “cursed “to experience lower growth meanwhile countries with good institutions and not so good resources experience rapid growth. Resources may preclude the development of good institutions. |
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kelptocracy
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a form of political and government corruption where the government corruption. Where the government exists to increase the personal wealth and political power of its officials and the ruling class at the expense of the wider population, often without pretense of honest service.
weakens trade with others, no one wants to trade with corrupt. As the kleptocracy normally embezzles money from its citizens by misusing funds derived from tax payments, or money laundering schemes, a kleptocratically structured political syste, tends to degrade nearly everyone’s quality of life. Significance the money that kleptocrats steal is taken from funds that were earmarked for public amenities, such as the building of hospitals, schools, roads, park—which was further adverse effects on the quality of life of the citizens living under a kleptocracyn This quasi-oligarchy that results from kleptocratic elite also subverts democracy (or any other political format the state is ostensibly under). |
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foreign aid
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Aid, such as economic or military assistance, offered by one nation to another
aid was given from developed to developing but the number has slowly trickled down. Another backlash of giving aid was it didn’t give developing governments the incentives to improve. Since now they could count on foreign aid effots to remedy their worst failings. Solution- to stop aid and try to sustain economic development within developing nations |
