The fatal flaw: the revived Bretton-woods system, liquidity creation, and commodity-price bubbles

Harris Dellas () and George Tavlas

No 122, Working Papers from Bank of Greece

Abstract: Dooley, Folkerts-Landau and Garber (DFG) argue that the present constellation of global exchange-rate arrangements constitutes a revived Bretton-Woods system. DFG ALSO argue that the revived system will be sustainable, despite its large global imbalances. We argue that, to the extent that the present system constitutes a revived Bretton-Woods system, it is vulnerable to the same set of destabilizing forces - - including asset price bubbles and global financial crises - - that led to the breakdown of the earlier regime.

Keywords: Bretton-Woods system; international liquidity; price bubbles; Markov switching model (search for similar items in EconPapers)
JEL-codes: C22 F33 N10 (search for similar items in EconPapers)
Pages: 20
Date: 2011-01
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (5)

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