For a somewhat more even-handed view of currency boards than the Wall St Jl
and Bus. Wk articles, see:
Nathaniel C. Nash, "A Strong Leash for Currencies on a Rampage," New York
Times, Sunday, February 5, 1995, p. 3 (business section). In addition to Mr
Hanke's song of praise for currency boards there's a discussion of the
straitjacket placed on macro policies. Globe-trotting consultant Jeffrey
Sachs counsels against a currency board "for large economies because it gives
up too much, taking away flexibility [of monetary policy]."
Mr. Hanke claims "no currency board ever set up has failed". One might ask,
to do what? There is good news from Mr Hanke for Russian citizens though: "I
question whether they [Russians] could implement anything that was not
subject to larceny." He goes on to suggest a board of 2 Russians, and an
American, German and Briton apiece control the ruble backed by a "carefully
controlled Swiss bank account." (tongue in cheek I think)
Fortuitously the same NYT issue has an article on the Argentine economy
"Argentina Booming, Bypassing Jobless" which tracks the drop in inflation,
increased GDP growth, and doubling of unemployment since 1990. This allowed
my money and banking class to see the costs of economic reforms --
privatization, labor market reforms to cut real wages, and proposed social
security cuts -- that might go along with the introduction of a currency
board. Hopefully students now appreciate the desirability of a second
opinion...
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Brent McClintock | |
Economics | People have "a taste |
Carthage College | for effective work |
Kenosha, Wisconsin 53140 | and a distaste for |
USA | futile effort" |
Phone: (414) 551-5852 | |
Fax: (414) 551-6208 | Thorstein Veblen |
Internet: [EMAIL PROTECTED] | |
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