International Economic Policy in Times of Crisis

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Governments face all kinds of crises every day, the approaches may be different but the goal is always the same—maintain stability. While, wars and crimes against humanity tend to take a toll on the population, infrastructure and terrain quite literally, financial crises can psychologically cripple a country. There’s something about a financial crisis that conjures a level of panic that could rival the outbreak of a deadly disease. Maybe this is caused by a lack of visible end, as it seems the light at the end of the tunnel is only made clear at the end of the crisis. Even with examples from history to refer to, each financial crisis seems to take on a version all its own like a new strain of a deadly virus. The government tries to administer the correct corresponding solution, but often it feels as though one might as well have gone in blind; as the policies’ true impact are unclear until several years later. Like a vaccine each new version is adjusted and reconfigured in hopes to take care of the new symptoms. Each formula is saved and stored so that experiments and tests can always continue in the future. Today in the modern world we would like to believe that some of these vaccines have reached a status of 100% confidence level. Though, as with the commonly used tools in times of crisis, one can never fully count on a one size fits all packages.

When a financial crisis infects a country they have a few remedies to stabilize the economy: import tariffs, industry subsidies, fiscal stimulus and monetary policy adjustments using interest rates. The method or combination of methods chosen coincides with the current trusted economic school of thought in the country. The American School believes that economic policy should protect...

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...- Los Angeles Times. (n.d.). Retrieved from http://articles.latimes.com/2005/jun/06/business/fi-protect6

International trade and finance: New frontiers for research: Essays in honor of Peter B. Kenen Cohen, Benjamin J, ed. Cambridge; New York and Melbourne: Cambridge University Press, 1997.

The modern world economy: Theories and policies

Overbeek, Johannes. Lanham, Md. and London: University Press of America, 1993.

Contemporary issues in applied economics

Bird, Graham; Bird, Heather, eds. Aldershot, U.K. and Brookfield, Vt.: Elgar, 1991.

International economics

Carbaugh, Robert. Third edition Belmont, Calif.: Wadsworth, 1989.

Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis Davin Chor and Kalina Manova NBER Working Paper No. 16174

July 2010, Revised February 2011 JEL No. F10,F14,F42,G01,G20,G28

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