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

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  • Stephen Hall

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  • George S. Tavlas

    ()

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.

Suggested Citation

  • 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.
  • Handle: RePEc:lec:leecon:11/21
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    Cited by:

    1. Hoang, Thi Hong Van & Lahiani, Amine & Heller, David, 2016. "Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach," Economic Modelling, Elsevier, vol. 54(C), pages 54-66.
    2. Maurice Obstfeld, 2013. "The International Monetary System: Living with Asymmetry," NBER Chapters,in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, pages 301-336 National Bureau of Economic Research, Inc.
    3. George S. Tavlas, 2016. "New Perspectives on the Great Depression: A Review Essay," International Finance, Wiley Blackwell, vol. 19(3), pages 353-374, December.

    More about this item

    Keywords

    Bretton-Woods regime; international liquidity; price bubbles; Markov switching model;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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

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