Eichengreen gives an overview of the connections between financial globalization, domestic autonomy, and social justice.

In The Crisis of Global Capitalism, George Soros claims that the international financial economy is inherently unstable, and that while economists have failed to recognize this because of their commitment to static equilibrium theory, politicians have failed to stabilize the global economy because of their commitment to an unquestioned faith in the complete efficiency of laissez faire. While Soros is right to argue that market participants’ expectations about the future can cause instability, he is wrong to maintain that this has (...) gone unrecognized by economists, and his notion that we live in a world of economic laissez faire is equally mistaken. Indeed, his own analysis of the Asian financial crisis points to the “moral hazard” created by expectations of government intervention, rather than to laissez faire, as the culprit. (shrink)

We present updated estimates of central bank transparency for 100 countries up through 2006 and use them to analyze both the determinants and consequences of monetary policy transparency in an integrated econometric framework. We establish that there has been significant movement in the direction of greater central bank transparency in recent years. Transparent monetary policy arrangements are more likely to be found in countries with strong and stable political institutions. They are more likely to be found in democracies, with their (...) culture of transparency. Using these political determinants as instruments for transparency, we show that more transparency in monetary policy operating procedures is associated with less inflation variability, though not also with less inflation persistence. (shrink)

Abstract In The Crisis of Global Capitalism, George Soros claims that the international financial economy is inherently unstable, and that while economists have failed to recognize this because of their commitment to static equilibrium theory, politicians have failed to stabilize the global economy because of their commitment to an unquestioned faith in the complete efficiency of laissez faire. While Soros is right to argue that market participants? expectations about the future can cause instability, he is wrong to maintain that this (...) has gone unrecognized by economists, and his notion that we live in a world of economic laissez faire is equally mistaken. Indeed, his own analysis of the Asian financial crisis points to the ?moral hazard? created by expectations of government intervention, rather than to laissez faire, as the culprit. (shrink)