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Current Global Imbalances and the Keynes Plan

Author

Listed:
  • Lilia Costabile
Abstract
This paper proposes an interpretation of current global imbalances based upon the nature of the international currency, its main objective being to present a “logical experiment”, illustrating how alternative models of international financial organization may produce opposite results in the global economy. In the current organization, "key currencies" work as international money. Keynes, by contrast, proposed that this role should be assigned to a supra-national, "credit" money. While the world currently lives in what has been defined as a “balance of financial terror”, Keynes tried to achieve a more peaceful type of “international balance”. I argue that some of the technical provisions of the “Keynes Plan” may still – at least in principle- provide useful remedies for international disequilibria, by remedying the asymmetries of the current international monetary system and curbing both inflationary and deflationary pressures on the world economy.

Suggested Citation

  • Lilia Costabile, 2007. "Current Global Imbalances and the Keynes Plan," Working Papers wp156, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp156
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    File URL: https://per.umass.edu/fileadmin/pdf/working_papers/working_papers_151-200/WP156.pdf
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    Citations

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    Cited by:

    1. Bánfi, Tamás & Kürthy, Gábor & Bánfi, Attila, 2011. "Regulation following (between) financial crisis (crises): compulsion and opportunity," Public Finance Quarterly, Corvinus University of Budapest, vol. 56(2), pages 193-213.
    2. Pietro Alessandrini & Michele Fratianni, 2009. "Resurrecting Keynes to Stabilize the International Monetary System," Open Economies Review, Springer, vol. 20(3), pages 339-358, July.
    3. Pietro Alessandrini & Michele Fratianni, 2007. "Resurrecting Keynes to Revamp the International Monetary System," Working Papers 2007-19, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    4. Costabile, Lilia, 2009. "Current global imbalances and the Keynes Plan: A Keynesian approach for reforming the international monetary system," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 79-89, June.
    5. Juan Barredo-Zuriarrain & Ricardo Molero-Simarro & Alejandro Quesada-Solana, 2017. "Euro-Dependence—A Peripheral Look beyond the Monetary Union: A Proposal of Reform of the TARGET2," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(3), pages 375-393, September.

    More about this item

    Keywords

    Global imbalances; valuation effects; key currencies; Keynes Plan;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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