Global Economic Policy the Combined

Global Economic Policy

The combined effects of monetary policies of nations globally, their relative roles in the International Monetary Fund (IMF) and the World Bank all contribute to the relative levels of exchange rate stability, and in turn, enable more liquidity in the flow of international currencies globally. What is foundational to the stability of exchange rates however is the monetary philosophies of the nations participating in such forums as the IMF and World Bank, two critical organizations that influence the exchange rate of currencies globally.

Keynesianism states that the macro-economic variables that financial institutions and governments can influence have the greatest impact on broader economic policy, specifically the supply and demand for goods and services according to Rollings (1985) (pgs. 263-265). Keynesianism differs markedly from Monetarist though which says the money supply determines demand. The majority of nations participating in the IMF and World Bank have embraced the Keynesian Revolution according to Rollings (1985) (et. al).Porter (1990) (et.al) sees the growth of Keynesian Revolution as indicative of supporting the theory of comparative advantage.

In the United Kingdom, Thatcherism was the term given to Prime Minister Margaret Thatcher's own monetary policy, which she vigorously promoted during her tenure as Prime Minster from 1979 to 1990. Thatcherism refers to an economic policy that is Monetarist in approach, choosing to focus on money supply and central banking as the determinants of economic growth. Thatcherism is also a political ideology that focuses on privatization of state-owned businesses and utilities, opposition to trade unions and a higher level of free market economic growth. Keynesian economists including Nobel Prize winner Milton Friedman considered Thatcherism anachronistic and more suited for the developing economies of the world than the more complex and developed westernized economies the United Kingdom and United States represent. Keynesians believe that broader economic growth and the focus on managing exchange rates is best defined through aggregate demand indicators for goods and services over money supplies.

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