Do Old Habits Die Hard? Central Banks and the Bretton Woods Gold Puzzle

Eric Monnet and Damien Puy

No 15286, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We assess the importance of individual and institutional experience in shaping macroeconomic policy by studying the persistence of gold standard monetary practices in the Bretton Woods system. Using new historical data from the IMF, we show that, although they were not required to, countries continued to back currency in circulation with gold. The longer an institution had spent in the gold standard before 1944 (and the older the policymakers), the tighter the link between gold and currency during Bretton Woods. Such “old habits†prevented dollars and gold from working as perfect substitutes and ultimately contributed to the demise of the Bretton Woods system. Our findings highlight the persistence of past practices, even in the face of radical institutional change, and its consequences on the international monetary system.

Keywords: Central banking; Foreign reserves; Culture & beliefs; Bretton woods; Gold; International monetary system (search for similar items in EconPapers)
JEL-codes: D83 E52 F33 M1 N10 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Do old habits die hard? Central banks and the Bretton Woods gold puzzle (2020)
Working Paper: Do old habits die hard? Central banks and the Bretton Woods gold puzzle (2020)
Working Paper: Do old habits die hard? Central banks and the Bretton Woods gold puzzle (2020)
Working Paper: Do Old Habits Die Hard? Central Banks and the Bretton Woods Gold Puzzle (2019)
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