1 Summary and Conclusions -- 2 The Role and Record of the G-7 13 -- The G-7 as an Institution 13 -- The Responsibilities of the G-7 15 -- Past Successes 20 -- 3 The Decline of the G-7 27 -- World Growth and Stability 27 -- Exchange Rates 30 -- International Imbalances 34 -- External Relations 35 -- The International Economic System 39 -- The Legitimacy of the G-7 43 -- The Bottom Line 49 -- 4 The Sources of G-7 Decline: Traditional Tensions 55 -- Growth vs. Stability 55 -- Surplus vs. Deficit Countries 59 -- Globalism vs. Regionalism 68 -- The Politics of the G-7 73 -- 5 The Sources of G-7 Decline: The New Consensus 83 -- The Immobilization of Fiscal Policy 86 -- The Primacy of the Central Banks 87 -- The Growth and Spread of Private Capital Flows 89 -- The Downgrading of the IMF 91 -- The Abdication of Responsibility 92 -- 6 Reviving the G-7 97 -- Resolving the Traditional Differences 97 -- Immobilization of Fiscal Policy and Coordination of Monetary Policy 100 -- The Role of the Central Banks 109 -- Coping with Private Capital Movements 112 -- The Bureaucratic Politics of Monetary Reform 117 -- 7 An Action Program 123 -- A New Exchange Rate Regime 124 -- Avoiding "Future Mexicos" 134 -- Enhancing the Legitimacy of the G-7 138 -- Appendix A International Economic Coordination 143 -- Boxes -- Box 1.1 International Economic Organizations 2 -- Box 2.1 The Three Groups 16 -- Box 2.2 The General Arrangements to Borrow 22 -- Table 3.1a G-7 share of world merchandise exports, 1950-94 45 -- Table 3.1b G-7 share of world merchandise imports, 1950-94 45 -- Table 3.2 Share of G-5 currencies in world foreign exchange reserves, 1973-94 46 -- Table 3.3 Shares of major currencies in world private transactions 46 -- Table 3.4 G-7 share of total international monetary reserves, 1973-95 47 -- Table 3.5 G-7 share of total IMF quotas, 1950-95 47 -- Table 7.1 G-7 performance on proposed cooperation criteria, 1995-97 132 -- Figure 2.1 G-7 share of gross world output, 1960-94 17 -- Figure 3.1 Yen per dollar, 4 January 1988 through 22 April 1996 31 -- Figure 3.2 Monthly real trade-weighted dollar exchange rate against 101 trading partners, January 1988-December 1995 49 -- Figure 3.3 Monthly real trade-weighted dollar exchange rate versus other G-7 countries, January 1988-November 1995 50 -- Figure 4.1 United States: current account and merchandise trade balance, 1970-95 60 -- Figure 4.2 Germany: current account and merchandise trade balance, 1970-95 60 -- Figure 4.3 Japan: current account and merchandise trade balance, 1970-95 61 -- Figure 4.4 United Kingdom: current account and merchandise trade balance, 1970-95 61 -- Figure 4.5 France: current account and merchandise trade balance, 1970-95 62 -- Figure 4.6 Italy: current account and merchandise trade balance, 1970-95 62 -- Figure 4.7 EU, Japan, and US: trade in goods and services, 1960-94 64 -- Figure 4.8 Current account surpluses by country share, 1994 66 -- Figure 7.1 Deutsche marks per dollar, 4 January 1988 through 22 April 1996 125.