Ronald I. McKinnon

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).

  • Exchange Rates under the East Asian Dollar Standard

    Exchange Rates under the East Asian Dollar Standard

    Living with Conflicted Virtue

    Ronald I. McKinnon

    The increasingly integrated economies of East Asia—China, Hong Kong, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand—face the dilemma of how to achieve exchange-rate security in the absence of a unifying "Asian euro." The US dollar has become the region's dominant intraregional trading currency as well as the monetary anchor to which East Asian economies informally peg their currencies. In this timely and original analysis of the benefits and risks of an East Asian dollar standard, Ronald McKinnon takes issue with the conventional view that urges flexible exchange rates on financially fragile economies. He argues instead that East Asian countries should coordinate their policies to keep their exchange rates stable against the dollar. McKinnon develops a conceptual framework to show where the conventional wisdom on exchange rates has gone wrong. Pressure on the "virtuous" high-saving dollar-creditor East Asian nations to appreciate their currencies leads to a "conflicted" choice between a possible deflationary slump if they do appreciate and threatened trade sanctions if they do not. Analyzing interactions among the East Asian economies, McKinnon explains the rationale, and the need, for greater exchange-rate security in the region, pointing to the soft-dollar pegs adopted by these nations as steps in the right direction. He suggests that the dollar standard in East Asia could be rationalized through collective action by national governments and considers the effect of American monetary and trade policies on the East Asian economy.

    • Hardcover $37.00
    • Paperback $5.75
  • Dollar and Yen

    Dollar and Yen

    Resolving Economic Conflict between the United States and Japan

    Ronald I. McKinnon and Kenichi Ohno

    Dollar and Yen analyzes the friction between the United States and Japan from the viewpoint of exchange rate economics.

    From the mid-1950s to the early 1990s, Japan grew faster than any other major industrial economy, displacing the United States in dominance of worldwide manufacturing markets. In the 1970s and 1980s, many books appeared linking the apparent decline of the United States in the world economy to "unfair" Japanese practices that closed the Japanese market to a wide range of foreign goods. Dollar and Yen analyzes the friction between the United States and Japan from the viewpoint of exchange rate economics. The authors argue against the prevailing view that the trade imbalance should be corrected by dollar depreciation, saying that adjustment through the exchange rate is both ineffective and costly. Stepping outside the traditional dichotomy between international trade and international finance, they link the yen's tremendous appreciation from 1971 to mid-1995 to mercantile pressure from the United States arising from trade tensions between the two countries. Although sometimes resisted by the Bank of Japan, this yen appreciation nevertheless forced unwanted deflation on the Japanese economy after 1985—resulting in two major recessions (endaka fukyos). The authors argue for relaxing commercial tensions between the two countries, and for limiting future economic downturns, by combining a commercial compact for mutual trade liberalization with a monetary accord for stabilizing the yen-dollar exchange rate.

    • Hardcover $50.00
  • The Rules of the Game

    The Rules of the Game

    International Money and Exchange Rates

    Ronald I. McKinnon

    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.

    • Hardcover $18.75
  • A New International Standard for Monetary Stabilization

    Ronald I. McKinnon

    This monograph makes specific proposals for stabilizing exchange rates while bringing joint money growth in the hard-currency countries under better control.

    Now available directly from: IIE11 Dupont Circle, NWWashington, DC 20036 Tel: (202) 328-9000 The wide swings in inflation rates, interest rates, and exchange rates in recent years maybe due at least partly to the failure of national monetary authorities - particularly in the United States, Germany, and Japan - to take adequate account of changes in the international demand for their currencies. More explicit coordination of monetary policies among these countries could provide a better foundation for world economic stability. This monograph makes specific proposals for stabilizing exchange rates while bringing joint money growth in the hard-currency countries under better control.

    • Paperback $10.00