oussama94
05-28-2017, 19:40
At the meeting in the Plaza Hotel, the United States persuaded the
other attendees to coordinate a multilateral intervention, and on September
22, 1985, the Plaza Accord was implemented. This agreement was designed
to allow for a controlled decline of the dollar and the appreciation
of the main antidollar currencies. Each country agreed to changes to its
economic policies and to intervene in currency markets as necessary to
get the dollar down. The United States agreed to cut its budget deficit and
to lower interest rates. France, the United Kingdom, Germany, and Japan
all agreed to raise interest rates. Germany also agreed to institute tax cuts
while Japan agreed to let the value of the yen “fully reflect the underlying
strength of the Japanese economy.” However, the problem with the actual
implementation of the Plaza Accord was that not every country adhered
to its pledges. The United States in particular did not follow through with
its initial promise to cut the budget deficit. Japan was severely hurt by the
sharp rise in the yen, as its exporters were unable to remain competitive
overseas, and it is argued that this eventually triggered a 10-year recession
in Japan. The United States, in contrast, enjoyed considerable growth and
price stability as a result of the agreement
other attendees to coordinate a multilateral intervention, and on September
22, 1985, the Plaza Accord was implemented. This agreement was designed
to allow for a controlled decline of the dollar and the appreciation
of the main antidollar currencies. Each country agreed to changes to its
economic policies and to intervene in currency markets as necessary to
get the dollar down. The United States agreed to cut its budget deficit and
to lower interest rates. France, the United Kingdom, Germany, and Japan
all agreed to raise interest rates. Germany also agreed to institute tax cuts
while Japan agreed to let the value of the yen “fully reflect the underlying
strength of the Japanese economy.” However, the problem with the actual
implementation of the Plaza Accord was that not every country adhered
to its pledges. The United States in particular did not follow through with
its initial promise to cut the budget deficit. Japan was severely hurt by the
sharp rise in the yen, as its exporters were unable to remain competitive
overseas, and it is argued that this eventually triggered a 10-year recession
in Japan. The United States, in contrast, enjoyed considerable growth and
price stability as a result of the agreement