Work

Atlas constrained: the US external balance sheet and international monetary power

Year: 2016

Type: article

Abstract: We address the impact on international monetary power of the size and nature of the US's international financial assets and liabilities. Financial globalization makes critical a focus on a nation's international financial assets and liabilities, its ‘external balance sheet’. We suggest an expansion of Cohen's existing framework of international monetary power to include the implications of valuation changes in these external balance sheets, focusing on sources of valuation, sensitivity and vulnerability of the US economy to these changes and implications for US ability to use monetary statecraft. By focusing on developments since 2007 and on events over the financial crisis period, we show that the increased size and nature of the US's external balance sheet has reduced US autonomy and monetary power. Underpinning the changes in the US's external balance sheet are activities of private financial market actors whose influence in international monetary affairs has grown markedly.

Source: Review of International Political Economy

DOI: 10.1080/09692290.2016.1176587

Authors: Iain Hardie, Sylvia Maxfield

Institutions: University of Edinburgh, Providence College

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: European Research Council

Award: G3237798769