The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature
AbstractThis 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.
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Bibliographic InfoPaper provided by LeBow College of Business, Drexel University in its series Department of Economics Working Paper Series with number 2012-1.
Length: 38 pages
Date of creation: 01 Jun 2012
Date of revision:
Bretton-Woods regime; international liquidity; price bubbles; Markov switching model;
Other versions of this item:
- Stephen G. Hall & George S. Tavlas, 2013. "The Debate About The Revived Bretton-Woods Regime: A Survey And Extension Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 27(2), pages 340-363, 04.
- Stephen Hall & George S. Tavlas, 2011. "The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature," Discussion Papers in Economics 11/21, Department of Economics, University of Leicester.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
- NEP-CWA-2013-07-28 (Central & Western Asia)
- NEP-MON-2013-07-28 (Monetary Economics)
- NEP-ORE-2013-07-28 (Operations Research)
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- Maurice Obstfeld, 2011.
"The International Monetary System: Living with Asymmetry,"
NBER Working Papers
17641, National Bureau of Economic Research, Inc.
- Maurice Obstfeld, 2011. "The International Monetary System: Living with Asymmetry," NBER Chapters, in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century National Bureau of Economic Research, Inc.
- Obstfeld, Maurice, 2011. "The International Monetary System: Living with Asymmetry," CEPR Discussion Papers 8703, C.E.P.R. Discussion Papers.
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