An Essay on the Revived Bretton Woods System

Michael Dooley, David Folkerts-Landau and Peter Garber

No 9971, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The economic emergence of a fixed exchange rate periphery in Asia has reestablished the United States as the center country in the Bretton Woods international monetary system. We argue that the normal evolution of the international monetary system involves the emergence of a periphery for which the development strategy is export-led growth supported by undervalued exchange rates, capital controls and official capital outflows in the form of accumulation of reserve asset claims on the center country. The success of this strategy in fostering economic growth allows the periphery to graduate to the center. Financial liberalization, in turn, requires floating exchange rates among the center countries. But there is a line of countries waiting to follow the Europe of the 1950s/60s and Asia today sufficient to keep the system intact for the foreseeable future.

JEL-codes: F02 F32 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-ifn
Note: IFM
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Published as Dooley, Michael P., David Folkerts-Landau and Peter Garber. "The Revived Bretton Woods System," International Journal of Finance and Economics 9(4): 307-313, October 2004
Published as Michael Dooley & David Folkerts-Landau & Peter Garber, 2005. "An essay on the revived Bretton Woods system," Proceedings, Federal Reserve Bank of San Francisco, issue Feb.

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