Posted by: Dirk | June 17, 2008

(Book review) Global Imbalances and the Lessons of Bretton Woods

Barry Eichengreen, a well-known economist, compares the Bretton Woods system with the supposed Bretton Woods II system. While BW-I was an agreement that featured mainly the US and Europe, BW-II features the US and Europe as well as Asia (see Dooley, Folkerts-Landau and Garber). Eichengreen wonders whether the willingness of countries to support an exchange rate system like BW-II is comparable with that of BW-I. His short answer is no.

Eichengreen then speculates how things will turn out in the near future, with the euro being an alternative to the dollar. It’s record so far as a currency that keeps its value makes it attractive for central banks. Eichengreen writes clearly, his style is readable even for non-economists. For those thinking about the euro and its international role as a reserve currency this book is recommended. Alternatively, there is a working paper that goes by the same name published at NBER.

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