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Frontmatter -- Contents -- Preface -- 1. Coordinating Macroeconomic Adjustment Policy -- 2. The Structure of the International System and Patterns of Policy Coordination -- 3. Insulation and Symptom Management, 1945-55 -- 4. Symptom Management, 1956-70 -- 5. Flexible Exchange Rates and the Search for Policy Autonomy, 1971-77 -- 6. Macroeconomic Conflict and Coordination, 1978-94 -- 7. Conclusions: International Structures, Domestic Politics and Policy Coordination -- Index

When capital is internationally mobile, small differences in macroeconomic policies generate massive payment imbalances that cannot be managed successfully with the policy tools used during the Bretton Woods era. Monetary & fiscal policy coordination is needed to stabilize the international economy, but is difficult to achieve. Here, insights from the theoretical literature on international cooperation are used to account for characteristics of policy coordination in recent years. Examination of the strategic situation helps to explain why governments have rejected proposals for a rules-based regime (eg, strict multilateral surveillance using quantitative indicators), yet have coordinated policy adjustments on an ad hoc basis in response to crises. A solution to the strategic problem -- in which there is one mutually adverse outcome (no adjustment by any government) & a number of Pareto-optimal outcomes preferred by different governments -- depends on the exercise of power. Consideration of theories about hegemony & cooperation suggests that the US continues to act as a hegemon in this area, albeit of the coercive rather than benevolent sort. International theories of cooperation, however, neglect the domestic policy-making practices & institutions that pose the central problems for international policy coordination. 49 References. Adapted from the source document.

Analysts have commonly argued that there has been a decline in international coordination of the kinds of policies that governments can use to manage the international payments imbalances that emerge when different governments pursue different macroeconomic policies. The decline typically has been attributed to a posited decline in American hegemony. In contrast, this article argues that international coordination of macroeconomic adjustment policies (trade and capital controls, exchange rate policies, balance-of-payments financing, and monetary and fiscal policies) was at least as extensive for much of the 1980s as it had been in the 1960s. There was, however, a shift away from coordination of balance-of-payments financing and other policies that have limited direct consequences for domestic economic and political conditions and a concurrent shift toward coordination of monetary and fiscal policies that are critically important for domestic politics and economics. This change is best explained as a consequence of changes in the structure of the international economy. Most important, international capital market integration encouraged governments to coordinate monetary and fiscal policies because balance-of-payments financing and exchange rate coordination alone are insufficient to manage the enormous payments imbalances that emerge when capital is able to flow internationally in search of higher interest rates and appreciating currencies.

Impact of international capital market integration on economic policies between the 1960s and the 1980s. Identifies a shift away from coordination of balance-of-payments financing and toward coordination of monetary and fiscal policies.

Hegemonic stability theory, which argues that international economic openness and stability is most likely when there is a single dominant state, is the most prominent approach among American political scientists for explaining patterns of economic relations among the advanced capitalist countries since 1945. It has provided a research programme for scholars, both as a positive guide and as a foil against which to test alternative theoretical explanations.