Understanding the Old and New Bretton Woods

Abstract

There are two interrelated usages of the term Bretton Woods in international macroeconomics. First it refers to the institutional structure put in place to govern international financial relationships in the post World War II era. Second it refers to the way in which the financial interactions relationships among countries operate. In both instances there are important differences between the Bretton Woods of the early post war period and the contemporary experience. In particular, the most important Bretton Woods institution, the IMF, plays a different role today than it did in the original fixed exchange rate system of the post war period. With regard to operations, large US current account deficits in recent years provide some resemblance to the role of the dollar earlier. This paper explains and contrasts the old and new Bretton Woods institutional and operating systems.