Bretton-Woods Systems, Old and New, and the Rotation of Exchange-Rate Regimes

40 Pages Posted: 21 Jul 2022

See all articles by G. S. Tavlas

G. S. Tavlas

Bank of Greece

Stephen G. Hall

University of Leicester - Department of Economics

G. Hondroyiannis

Bank of Greece

P.A.V.B. Swamy

Federal Reserve Board

Date Written: April 1, 2010

Abstract

A recent contribution to the literature argues that the present international monetary system in many ways operates like the Bretton-Woods system. Asia is the new periphery of the system and pursues an export-led development strategy based on undervalued exchange rates and accumulated foreign reserves. The United States remains the centre country, pursuing a monetary-policy strategy that overlooks the exchange rate. Under both regimes the United States does not take external factors into account in conducting monetary policy while the periphery does take external factors into account. We provide results of a test of this hypothesis. Then, we present a new method for decomposition of a seasonally adjusted series the business cycle and other components using a time-varyingcoefficient technique that allows us to test the relationship between the cycle and macroeconomic policies under both regimes.

Keywords: Revived Bretton-Woods system, asymmetry hypothesis, time-series, decomposition, time-varying-coefficient estimation

JEL Classification: C22, E32, F33

Suggested Citation

Tavlas, George and Hall, Stephen G. and Hondroyiannis, G. and Swamy, P.A.V.B., Bretton-Woods Systems, Old and New, and the Rotation of Exchange-Rate Regimes (April 1, 2010). Bank of Greece Working Paper No. 112, Available at SSRN: https://ssrn.com/abstract=4166736 or http://dx.doi.org/10.2139/ssrn.4166736

George Tavlas (Contact Author)

Bank of Greece ( email )

21 E. Venizelos Avenue
GR-10250 Athens
Greece
+30 10 323 7224 (Phone)
+30 10 323 3025 (Fax)

Stephen G. Hall

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

G. Hondroyiannis

Bank of Greece ( email )

21 E. Venizelos Avenue
GR-10250 Athens
Greece
+011 301 3202429 (Phone)
+011 301 3233025 (Fax)

P.A.V.B. Swamy

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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