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The Missing Bretton Woods Debate over Flexible Exchange Rates

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  • Douglas A. Irwin

Abstract

The collapse of the gold standard in the 1930s sparked a debate about the merits of fixed versus floating exchange rates. Yet the debate quickly vanished: there was almost no discussion about the exchange rate regime at the Bretton Woods conference in 1944 because John Maynard Keynes and Harry Dexter White agreed that exchange rate stability through fixed but adjustable pegs was the right approach. In light of the difficult macroeconomic tradeoffs experienced under the gold standard a decade earlier, the outright rejection of floating exchange rates seems surprising. This paper explores the views of leading economists about the exchange rate provisions in the Bretton Woods agreement and examines why arguments for floating exchange rates were so quickly dismissed.

Suggested Citation

  • Douglas A. Irwin, 2017. "The Missing Bretton Woods Debate over Flexible Exchange Rates," NBER Working Papers 23037, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23037
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    References listed on IDEAS

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    8. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133.
    9. Anthony M. Endres, 2008. "Frank Graham's Case for Flexible Exchange Rates: A Doctrinal Perspective," History of Political Economy, Duke University Press, vol. 40(1), pages 133-162, Spring.
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    Cited by:

    1. Edward Nelson, 2020. "The Continuing Validity of Monetary Policy Autonomy under Floating Exchange Rates," International Journal of Central Banking, International Journal of Central Banking, vol. 16(2), pages 81-123, March.
    2. Giovanni Ferri, 2022. "General overview of the first 50 years of Economic Notes, 1972–2021," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(S1), December.

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    More about this item

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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