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The revived Bretton Woods system

Author

Listed:
  • Michael P. Dooley

    (National Bureau of Economic Research, USA)

  • David Folkerts-Landau

    (National Bureau of Economic Research, USA)

  • Peter Garber

    (National Bureau of Economic Research, USA)

Abstract

The economic emergence of a fixed exchange rate periphery in Asia has re-established the United States as the centre 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 centre country. The success of this strategy in fostering economic growth allows the periphery to graduate to the centre. Financial liberalization, in turn, requires floating exchange rates among the centre 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. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
  • Handle: RePEc:ijf:ijfiec:v:9:y:2004:i:4:p:307-313
    DOI: 10.1002/ijfe.250
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    References listed on IDEAS

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    1. Ronald McKinnon & Gunther Schnabl, 2004. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 331-360, August.
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    3. Michael D. Bordo & Marc Flandreau, 2003. "Core, Periphery, Exchange Rate Regimes, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 417-472, National Bureau of Economic Research, Inc.
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