On Mon, October 19, 1998 at 10:33:22 (-0700) Michael Perelman writes: >Today, Tom Kruse asked about measuring unemployment. A few days ago, >Bill Lear asked about international finance. No one answered Bill, and >the way things are going, I would not be surprised if no one answered >Tom. Yeah, you Heartless Bastards. I might have to read Krugman if nobody helps out! Actually, I think I have satisfied myself that, in theory, things are as I depicted them. From my earlier diagram: >> England (1) Japan >> |--------| English |--------| >> | | Exports | | >> | |------------>| | >> | | | | (2) >> | | (4) | | Yen >> | | English | |-------->|---------| >> | | Pounds | | (3) | | >> | |<------------| | Pounds | | >> | | | |<--------| | >> |--------| |--------| |---------| >> Forex >> Market >> >>Are the monetary results the following, waving our magic ceteris >>paribus wand?: >> >> o Supply of Yen drops in Japan, causing an interest rate rise >> o Supply of Yen rises on exchange, causing price of Yen to drop >> o Supply of Pound drops on exchange, causing price of Pound to rise >> o Supply of Pound rises in England, causing an interest rate drop Of course, adding in The Real World converts the "causing" part of the above conclusions to "puts pressure on". The reason I am asking such a basic question is that I'm trying to build a from-the-ground-up understanding of how international trade and finance is structured. This is because I want to then identify the groups involved and the policy prescriptions they tend to urge upon governments. This then, hopefully, leads to answers of the sine qua non question of political economics, Cui bono? and it's correlate Cui futuo? (My conjugation is probably wrong, but you get the picture.). I have found my understanding of these mechanisms woefully inadequate, as a very limited debate with *Wall Street Journal*-quoted professor Brad De Long on these issues has made me aware (even though I think I've just confirmed that I've already won that debate). In my effort to build this understanding I have begun reading Marcello De Cecco's book *Money and Empire*, as well as his 1979 article "Origins of the Post-War Payments System" in the *Cambridge Journal of Economics*, a copy of the latter I would be glad to share, as I have it scanned in. The next level in my construction will be to add in government actors, as well as all of the Balance of Payment accounting, and then upward and onward to investment and speculative flows, etc.... I have found Andrew Dunnett's *Understanding the Economy* helpful, as well as a few chapters in Paul Davidson's *Post Keynesian Macroeconomic Theory*, though none of the works I have so far examined really gives what I consider to be a complete account. Any other suggestions would be welcome. Bill
