Bretton Woods and the Reconstruction of Europe

Lee Ohanian, Paulina Restrepo-Echavarria, Diana Van Patten and Mark Wright

No 2019-30, Working Papers from Federal Reserve Bank of St. Louis

Abstract: The Bretton Woods international financial system, which was in place from roughly 1949 to 1973, is the most significant modern policy experiment to attempt to simultaneously manage international payments, international capital flows, and international currency values. This paper uses an international macroeconomic accounting methodology to study the Bretton Woods system and finds that it: (1) significantly distorted both international and domestic capital markets and hence the accumulation and allocation of capital; (2) significantly slowed the reconstruction of Europe, albeit while limiting the indebtedness of European countries. Our results also provide support for the utility of the accounting methodology in that it finds a sharp change in the behavior of domestic and international capital market wedges that coincides with the breakdown of the system.

Keywords: Bretton Woods; International Payments; Capital Flows (search for similar items in EconPapers)
JEL-codes: E21 F21 F41 J20 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2019-10-13
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-ore
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Working Paper: Bretton Woods and the Reconstruction of Europe (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2019-030

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DOI: 10.20955/wp.2019.030

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