Milton believed that unwarranted government intervention was unwelcome in economic affairs. The economist suggested that low-interest rates were not to be compared to easy monetary policies. In effect, weakening the currency is known to increase domestic demand. The move is known to have negative impacts on foreign trading partners. However, central banks can develop measures to counter the effects of depreciated currencies. This increases the absorption capacity of the countries involved in the trade (Berg & Lewer 2007). The capacity is enhanced through technology. International trade has led to productivity through innovation and practice (Peacock 2013).
Therefore, international trade is known to lead to the increased institutional vibrancy and robust changes in developing economies. The liberal or international trade facilitates market mechanism ideas, trading of goods and ideas (Berg & Lewer 2007). Developing countries are increasingly applying market power with minimum intervention from the government. International trade plays a crucial role in propelling fueling economic growth (Berdell 2002). International trade can become the engine of economic growth in a country. Currency wars lead to uncertainty in national policies.
wars are also associated with supply chain disruption and currency volatility. Any efforts to change the international monetary system must recognize the resilience of the system. The rules of international trade bind countries from manipulation of exchange rates (Berdell 2002). Capital controls like macroeconomic policies and macro-prudential policies have spillover effects if there is no adequate and coordinated international effort to address monetary policies. Trade disputes between countries are expected to arise because of the currency wars (Peacock 2013). This might disrupt the supply chain in the international market.
indicates that countries with floating currencies are expected to experience more favorable economic conditions than those with pegged currencies (Berg & Lewer 2007).
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