Bretton Woods and the Reconstruction of Europe

56 Pages Posted: 27 Nov 2019

See all articles by Lee E. Ohanian

Lee E. Ohanian

University of California, Los Angeles (UCLA)

Diana Van Patten

University of California, Los Angeles (UCLA)

Paulina Restrepo-Echavarria

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Mark L. J. Wright

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

Date Written: 2019-10-13

Abstract

The Bretton Woods international financial system, which was in place from roughly 1949 to 1973, is the most significant modern policy experiment to attempt to simultaneously manage international payments, international capital flows, and international currency values. This paper uses an international macroeconomic accounting methodology to study the Bretton Woods system and finds that it: (1) significantly distorted both international and domestic capital markets and hence the accumulation and allocation of capital; (2) significantly slowed the reconstruction of Europe, albeit while limiting the indebtedness of European countries. Our results also provide support for the utility of the accounting methodology in that it finds a sharp change in the behavior of domestic and international capital market wedges that coincides with the breakdown of the system.

Keywords: Bretton Woods, International Payments, Capital Flows

JEL Classification: E21, F21, F41, J20

Suggested Citation

Ohanian, Lee E. and Van Patten, Diana and Restrepo-Echavarria, Paulina and Wright, Mark L.J., Bretton Woods and the Reconstruction of Europe (2019-10-13). FRB St. Louis Working Paper No. 2019-30. Available at SSRN: https://ssrn.com/abstract=3494170 or http://dx.doi.org/10.20955/wp.2019.030

Lee E. Ohanian (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Diana Van Patten

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Paulina Restrepo-Echavarria

Federal Reserve Banks - Federal Reserve Bank of St. Louis

P.O. Box 442
St. Louis, MO 63166-0442
United States

Mark L.J. Wright

Federal Reserve Banks - Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
7
Abstract Views
46
PlumX Metrics