Dooley Folkerts-Landau e Garber - An Essay

Dooley Folkerts-Landau e Garber - An Essay - NBER WORKING...

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NBER WORKING PAPER SERIES AN ESSAY ON THE REVIVED BRETTON WOODS SYSTEM Michael P. Dooley David Folkerts-Landau Peter Garber Working Paper 9971 http://www.nber.org/papers/w9971 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 September 2003 The views expressed herein are those of the authors and are not necessarily those of the National Bureau of Economic Research. ©2003 by Michael P. Dooley, David Folkerts-Landau, and Peter Garber. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
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An Essay on the Revived Bretton Woods System Michael P. Dooley, David Folkerts-Landau, and Peter Garber NBER Working Paper No. 9971 September 2003 JEL No. F02, F32, F33 ABSTRACT The economic emergence of a fixed exchange rate periphery in Asia has reestablished the United States as the center 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 center country. The success of this strategy in fostering economic growth allows the periphery to graduate to the center. Financial liberalization, in turn, requires floating exchange rates among the center 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. Michael P. Dooley Department of Economics Social Sciences I University of California Santa Cruz, CA 95064 and NBER mpd@ucsc.edu David Folkerts-Landau 1331 21 st Street, NW Washington, DC 20036 david.folkerts-landau@db.com Peter Garber 7 Seaview Drive Barington, RI peter.garber@db.com
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Let me be more positive: if I had an agreement with my tailor that whatever money I pay him returns to me the very same day as a loan, I would have no objection at all to ordering more suits from him. Jacques Rueff (1965) In this paper we explore the idea that the global system that has evolved and grown since the advent of Bretton Woods has maintained a single dynamic structure. In the Bretton Woods system of the 1950s, the US was the center region with essentially uncontrolled capital and goods markets. Europe and Japan, whose capital had been destroyed by the war, constituted the emerging periphery. The periphery countries chose a development strategy of undervalued currencies, controls on capital flows and trade, reserve accumulation, and the use of the center region as a financial intermediary that lent credibility to their own financial systems. In turn, the US lent long term to the periphery, generally through FDI.
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This note was uploaded on 09/25/2010 for the course ECO IntEco taught by Professor Andre during the Spring '06 term at UFRGS.

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Dooley Folkerts-Landau e Garber - An Essay - NBER WORKING...

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