NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

International Transmission Under Bretton Woods

Alan C. Stockman

NBER Working Paper No. 4127
Issued in July 1992
NBER Program(s):   IFM

This paper explores the main channels of international transmission of economic disturbances under the Bretton Woods System and presents evidence on the short-run international transmission of inflation under that system. There appears to have been little short-run international transmission of inflation. Countries with one-percent higher money-growth rates subsequently had one-fourth to one-half percent higher inflation and a (predictably) lower real interest rate. This probably reflects effects of money growth on inflation and interest rates rather than reverse causation: the natural interpretation of the evidence is that countries had some scope for monetary-policy independence under Bretton Woods, despite pegged exchange rates, and exercised that independence in ways that limited international transmission.

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Document Object Identifier (DOI): 10.3386/w4127

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