Money Matters: An IMF Exhibit -- The Importance of Global Cooperation

Debt and Transition (1981-1989)



Conflict &
(1871 - 1944)

Destruction &
(1945 - 1958)
The System
In Crisis

(1959 - 1971)
the System
(1972 - 1981)
Debt &
(1981 - 1989)
Globalization and Integration
(1989 - 1999)
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Real prices:

Real prices are prices that have been adjusted for general inflation. Separating the inflationary component from the movement in the price of some product gives a more accurate and informative insight into the trend in its price in relation to other goods and services.


Rescheduling of debt:

A country, finding itself unable to pay its debt on time, can often negotiate with the lender a rescheduling of debt-allowing it a longer period in which to repay what it owes. Rescheduling is beneficial to both borrower and lender. The borrowing country avoids default (which can have drastic consequences for its credit rating) and, although it might have to pay more in interest charges, is not forced to take other, more damaging measures. The lender, considering the alternative of getting nothing back in the event of default, will often in these circumstances agree to a rescheduling.


Fiscal or budget deficits:

Fiscal or budget deficits occur when governments expenditures exceed revenues. The way out of a budget deficit may involve raising taxes, reducing government expenditure, or a combination of both. Obviously none of these solutions is popular with the electorate. For this reason, politicians are often loath to make the hard decisions required, the budget deficit worsens, and, in some cases, the government must seek assistance from international lenders.


Trade barriers:

Trade barriers are attempts to limit the import of foreign goods and services into a country. The most common barriers are quotas (limiting the quantity of foreign goods that can enter the country), tariffs (charging a tax on goods entering the country), and subsidies (paying local producers to artificially lower the price of their goods relative to foreign competitors).


International capital:

International capital refers to assets that move from one country to another. When investors have good information, international capital flows are economically efficient since investors will tend to place their money only in the highest-yielding enterprises and financial instruments.


Centrally planned economies:

In centrally planned economies, the state, rather than the free market, determines where investments will be made, what will be produced, what the level of wages and salaries will be, and how much products will cost.


Countries Don't
Go Bankrupt
Time Bomb Explodes Solving the Problem Attempted Rescue
Regional Economic Integration The Power of Private Capital Thaw in the East

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