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The Bretton Woods System: Paradise Lost?

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  • Barry Eichengreen.

Abstract

The Bretton Woods System frequently appears in the scholarly literature as a model for international monetary reform. This paper briefly considers its operation. It argues that the system's principal achievement, the maintenance of stable exchange rates, was product not of the agreement finalized at the Bretton Woods Conference alone but of two exceptional features of the postwar world. One was the limited international mobility of capital. Capital controls provided policymakers room for maneuver; they softened the tradeoff between domestic objectives and defense of the exchange-rate peg. The other was singular scope for growth resulting from postwar reconstruction and catch-up. In these circumstances, countries felt little need to engage in discretionary monetary and fiscal policies that might have undermined the currency peg.
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  • Barry Eichengreen., 1994. "The Bretton Woods System: Paradise Lost?," Center for International and Development Economics Research (CIDER) Working Papers C94-043, University of California at Berkeley.
    • Handle: RePEc:ucb:calbcd:c94-043
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    References listed on IDEAS

    as
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    26. Maurice Obstfeld., 1993. "Model Trending Real Exchange Rates," Center for International and Development Economics Research (CIDER) Working Papers C93-011, University of California at Berkeley.
    27. Barry Eichengreen., 1993. "The Crisis in the EMS and the Transition to EMU: An Interim Assessment," Center for International and Development Economics Research (CIDER) Working Papers C93-022, University of California at Berkeley.
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    Cited by:

    1. Frankel, J-A & Rose, A-K, 1996. "Economic Structure and the Decision to Adopt a Common Currency," Papers 611, Stockholm - International Economic Studies.
    2. Barry Eichengreen., 1994. "History and Reform of the International Monetary System," Center for International and Development Economics Research (CIDER) Working Papers C94-041, University of California at Berkeley.
    3. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1994. "Speculative Attacks on Pegged Exchange Rates: An Empirical Exploration with Special Reference to the European Monetary System," CEPR Discussion Papers 1060, C.E.P.R. Discussion Papers.
    4. Bardhan, Pranab, 1996. "The Nature of Institutional Impediments to Economic Development," Department of Economics, Working Paper Series qt8w12j7q1, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    5. Jeffrey A. Frankel & Andrew K. Rose, 1994. "A Survey of Empirical Research on Nominal Exchange Rates," NBER Working Papers 4865, National Bureau of Economic Research, Inc.
    6. Frankel, Jeffrey A, 1996. "Recent Exchange-Rate Experience and Proposals for Reform," American Economic Review, American Economic Association, vol. 86(2), pages 153-158, May.
    7. Frankel, Jeffrey A. & Rose, Andrew K., 1996. "A panel project on purchasing power parity: Mean reversion within and between countries," Journal of International Economics, Elsevier, vol. 40(1-2), pages 209-224, February.
    8. Obstfeld, Maurice, 1996. "Intertemporal price speculation and the optimal current-account deficit: reply and clarification," Journal of International Money and Finance, Elsevier, vol. 15(1), pages 141-147, February.
    9. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-172, January.
    10. Eichengreen, Barry & Flandreau, Marc, 1994. "The Geography of the Gold Standard," Center for International and Development Economics Research (CIDER) Working Papers 233393, University of California-Berkeley, Department of Economics.
    11. Eichengreen, Barry & Wyplosz, Charles, 1995. "What Do Currency Crises Tell Us About the Future of the International Monetary System?," Center for International and Development Economics Research (CIDER) Working Papers 233418, University of California-Berkeley, Department of Economics.
    12. Frankel, Jeffrey & Wyplosz, Charles, 1995. "A Proposal to Introduce the ECU First in the East," Center for International and Development Economics Research (CIDER) Working Papers 233415, University of California-Berkeley, Department of Economics.
    13. Bardhan, Pranab, 1996. "The Nature of Institutional Impediments to Economic Development," Center for International and Development Economics Research (CIDER) Working Papers 233429, University of California-Berkeley, Department of Economics.
    14. Eichengreen, Barry, 1995. "Sterling in Decline Again: The 1931 and 1992 Crises Compared," Center for International and Development Economics Research (CIDER) Working Papers 233404, University of California-Berkeley, Department of Economics.

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    JEL classification:

    • F0 - International Economics - - General
    • N0 - Economic History - - General

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