BRICS and Allies Rise

Jeffrey Sachs is a well-known American economist, academic, and public policy analyst who has made significant contributions to the fields of sustainable development and economic development. 

He has held various prestigious positions throughout his career, including serving as the director of The Earth Institute at Columbia University and as a special advisor to the United Nations Secretary-General on the Millennium Development Goals. 

Sachs has authored numerous books and articles on topics related to economics, poverty reduction, and sustainable development. Website: jeffsachs.org

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The Plaza Accord was a joint–agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British pound sterling by intervening in currency markets. 

The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987. Some commentators believe the Plaza Accord contributed to the Japanese asset price bubble of the late 1980s.

The devaluation made U.S. exports cheaper to purchase for its trading partners, which in turn allegedly meant that other countries would buy more American-made goods and services. 

The Plaza Accord failed to help reduce the U.S.–Japan trade deficit, but it did reduce the U.S. deficit with other countries by making U.S. exports more competitive. And thus, the US Congress refrained from enacting protectionist trade barriers. [Here]

The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations, but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan. This deficit was due to structural conditions that were insensitive to monetary policy, specifically trade conditions.