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BRETTON WOODS II STILL DEFINES THE INTERNATIONAL MONETARY SYSTEM
Author(s) -
Dooley Michael,
FolkertsLandau David,
Garber Peter
Publication year - 2009
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2009.00453.x
Subject(s) - protectionism , economics , monetary system , world economy , financial crisis , capital (architecture) , monetary economics , capital flows , international economics , keynesian economics , macroeconomics , monetary policy , market economy , political science , geography , liberalization , archaeology , law
. In this paper we argue that net capital inflows to the USA did not cause the financial crisis that now engulfs the world economy. A crisis caused by such flows has been widely predicted but that crisis has not occurred. Indeed, the international monetary system still operates in the way described by the Bretton Woods II framework and is likely to continue to do so. Failure to properly identify the causes of the current crisis risks a rise in protectionism that could intensify and prolong the decline in economic activity around the world.