International Business

•   -try to bailout countries imbalances or equity issues    
•  -helping countries in trouble   
•  -crisis management criticized 

happens on the day, it is the current exchange rate, changes daily

sign today but don't make exchange till later, unbiased predictor of future spot exchange rate

 F(forward)x -spot exchange rate / spot exchange rate X 12/# of months X 100 (to get percent)

•    balance of payments   
•  interest rates   
•  inflation   
•  monetary and fiscal policies 
•    international competitiveness   
•  monetary reserves   
•  gov't control and incentives 
•    importance of currency to the world

•  -law of one price   
•  -competitive markets free of transportations costs and trade barriers, identical products sold in different countries      
•     -must sell for the same price when their price is expressed in terms of same currency   
•  example: US/Japan = 1$ to 120 yen, so a jacket in new york that sells for 50 should be sold for 6000, 50 X 120

-by comparing the prices of identical products in difference currencies, it should be possible to determine the 'real' or PPP exchange rate if markets are efficient 

•  -overshadowed by the Marshall Plan  
•  -turns to development     
•  -lending money  to developing nations for a long-term                -examples: education, population control

• - surveillance of exchange rate policies 
• -short term financial assistance (including credits and loans)    - technical assistance (expertise in fiscal/monetary policy)

•      -IMF role expanded to meet the various crisis       
•   -plans of deflationary measures/austerity  
•  1. currenceny
•   -thailand     
• 2. banking       
•   -non-performing loans, can't get people to pay them back          -giving out bad loans and not being able to get them back      3. foreign debt             
•   -borrowed too much money, can't pay it back

• global/standardization
• localization/multi domestic strategy
• transnational
• international strategy

  -WTO believes this (REI) is the first step to overall globalization of economy/agreement     -easier to reach agreements between agreement between two parties, bilateral agreement -> just two parties      -agreement amount countries in a geographic location to reduce and ultimately remove tariffs and NTBs to free flow of goods services and factors of production amount each other