The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature*

Stephen Hall (sh222@le.ac.uk) and George Tavlas

No 11/21, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: This paper surveys the literature dealing with the thesis put forward by Dooley, Folkerts-Landau and Garber (DFG) that the present constellation of global exchange-rate arrangements constitutes a revived Bretton-Woods regime. DFG also argue that the revived regime will be sustainable, despite its large global imbalances. While much of the literature generated by DFG’s thesis points to specific differences between the earlier regime and revived regime that render the latter unstable, we argue that an underlying similarity between the two regimes renders the revived regime unstable. Specifically, 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 marked the latter years of the earlier regime, leading to its breakdown. We extend the Markov switching model to examine the relation between global liquidity and commodity prices. We find evidence of commodity-price bubbles in both the latter stages of the earlier Bretton-Woods regime and the revived regime.

Keywords: Bretton-Woods regime; international liquidity; price bubbles; Markov switching model (search for similar items in EconPapers)
JEL-codes: C22 F33 N10 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: THE DEBATE ABOUT THE REVIVED BRETTON-WOODS REGIME: A SURVEY AND EXTENSION OF THE LITERATURE (2013)
Working Paper: The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature (2012)
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