The Rules of the Game: International Money and Exchange Rates [Hardcover]

Ronald I. McKinnon (Author)

Book Description

Publication Date: August 1, 1996

Generalized financial volatility is capitalism's Achilles' heel. And nowhere is the problem of controlling such volatility more acute than in monetary and exchange-rate relationships across countries - the central theme of this book.The Rules of the Game brings together essays, written over the course of thirty years, by a major figure in the field that analyze and compare a wide variety of important international monetary regimes. These range from the establishment of the gold standard in the nineteenth century through Bretton Woods, the dollar standard, floating exchange rates, the European Monetary System, to current proposals for reforming world monetary arrangements.The essays are unique in that they specify precisely the rules of the game for each international monetary regime - past, present, and future. For ease of reference, the book offers boxed summaries of each set of rules and then discusses their advantages and disadvantages from the gold standard down to the author's proposal for a common monetary standard for the twenty-first century.Part I assesses each monetary regime's success in stabilizing prices and exchange rates, while fostering international trade. Part II addresses a central question each country faces: what are the benefits of giving up exchange-rate flexibility to join a common monetary standard? Part III focuses on overall monetary reform for limiting financial volatility and exchange-rate crises in the next century - including whether or not Western Europe should adopt a common currency. The last chapter synthesizes and updates the author's previous writings on rationalizing monetary arrangements among the major industrial countries of North America, Western Europe, and East Asia.

Editorial Reviews

About the Author

Ronald I. McKinnon is William D. Eberle Professor of International Economics at Stanford University. He is the author of several books on international economics and development finance, including The Rules of the Game: International Money and Exchange Rates (MIT Press, 1996) and, with Kenichi Ohno, Dollar and Yen: Resolving Economic Conflict between the United States and Japan (MIT Press, 1997).

Product Details

• Hardcover: 528 pages
• Publisher: The MIT Press (August 1, 1996)
• Language: English
• ISBN-10: 0262133180
• ISBN-13: 978-0262133180
• Product Dimensions: 9.2 x 6.5 x 1.6 inches
• Shipping Weight: 2.6 pounds (View shipping rates and policies)
• Average Customer Review: 3.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #1,546,517 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

1 of 3 people found the following review helpful:

3.0 out of 5 stars A clear overview of the history of international exchange rates, July 19, 2007

By 

Asatar Bair (Tucson, AZ) - See all my reviews
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This review is from: The Rules of the Game: International Money and Exchange Rates (Hardcover)

This book is a fine reference for a mainstream neoclassical-Keynesian synthesis view of money and exchange rates. It's a good source for information about the arrangements that governed international trade under the various international agreements of the last 100 years or so.

I give the book three stars for some of its theoretical failures, which is first and foremost, a misunderstanding of the nature of money, and hence, of exchange rates. The book follows much of the economics field in treating money as a creature of the government. That is only the case in the last 35 years or so, which is a kind of radical experiment. Money does not exist because governments say so. If this were true, money could never have developed. Money is a medium of exchange which has everything to do with its status as a store of value. Governments cannot create an item that has value simply by a government seal. All over the world, fiat currencies have lost value rapidly, because the long-term historical value of paper money is zero. Exchange rates operate chaotically, because they depend on arbitrage in foreign exchange markets, but all fiat currencies are inexorably headed toward zero.

While this book is a good reference for how much of the economics field views money, I find it gives a misleading picture of the nature of money. I'd recommend Rothbard's "What has the government done to our money?" for a clearer picture.