|
Michael Bordo
NBER Working Paper No. 4310 (Also Reprint No. r1818)*
Issued in October 1993
NBER Program(s): IFM
DAE
ME
---- Abstract -----
This paper provides answers to two questions. The first question is which international monetary regime is best for economic performance? One based on fixed exchange rates: including the gold standard and its variants? Adjustable peg regimes such as the Bretton Woods system and the European Monetary System? Or one based on floating exchange rates? The second question is why have some monetary regimes been more successful than others? Specifically. why did the classical gold standard last close to a century (at least for Great Britain) and why did Bretton Woods only endure for twenty-five years (or less)? Why was the European Monetary System successful for only a few years? To answer the first question I examine empirical evidence on the performance of three monetary regimes: the classical gold standard; Bretton Woods; and the current float; and as a backdrop the mixed regime interwar period. 1 answer the second question by linking regime success to the presence of credible commitment mechanisms, that is to the incentive compatibility features of the regime. Successful fixed rate regimes. in addition to being based on simple transparent rules. contained features which encouraged a center country to enforce the rules and other countries to comply.
*Published: Federal Reserve Bank of St. Louis Review, Vol. 75, No. 2, pp. 123-191,(March/April 1993).
Would you like an annual subscription to NBER Working Papers? Click
here for more information.
You may purchase this paper on-line in .pdf format
from SSRN.com ($5) for electronic delivery.
Information for subscribers and others expecting no-cost downloads
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
| 
