The Bretton Woods negotiations are typically described as an intellectual contest between Harry Dexter White and John Maynard Keynes and their rival plans for postwar monetary order. This framing directs attention to the national priorities that the two statesmen sought to advance—an open trading system based on pegged exchange rates and free capital markets in the case of the United States and a full-employment-friendly international system of adjustable exchange rates and inconvertible currencies in the case of Great Britain. The story reaches a climax with the compromise of pegged but adjustable exchange rates and currencies convertible on current but not capital account. Richard Gardner’s Sterling-Dollar Diplomacy in Current Perspective: The Origins and Prospects of Our International Economic Order (New York, 1956) is an influential case in point; Benn Steil’s Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White and the Making of a New World Order (Princeton, 2013) is another.While acknowledging that thirty-two of the forty-four delegations at Bretton Woods were from what we would now call emerging markets, this narrative dismisses their participation as marginal. As a result, their agenda of finance for development was diminished. The International Monetary Fund, not the World Bank, became the dominant Bretton Woods institution, and the Fund focused on the advanced countries.Drawing on the ample secondary literature but also on such primary sources as the recently rediscovered transcripts of the Bretton Woods conference, Helleiner challenges this conventional view. Developing countries, far from passive, actively sought to advance their interests. The United States and the United Kingdom embraced their arguments for state-led development and official finance. The New Deal rendered American officials sympathetic to arguments in favor of an expanded role for the state. Already, in the second half of the 1930s, these officials had sought a financial partnership with Latin America under the umbrella of President Franklin D. Roosevelt’s Good Neighbor policy. U.S. “money doctors” like White, as well as Robert Triffin of the Federal Reserve Board, had headed technical-assistance missions with a strong developmental component to Cuba and Paraguay. Helleiner rejects Gardner’s argument that the developmental agenda, as symbolized by the Point Four Program of technical assistance announced by PresidentTruman in his 1949 inaugural address, if not also the very concept of international development, were products of the Cold War.Helleiner makes a compelling case, although he exaggerates the influence of developing countries at Bretton Woods. They attended, to be sure. They offered ideas. But their mere presence does not mean that they significantly influenced the negotiations or the outcome. There was an asymmetry of power, since the United States held the purse strings. Moreover, as Helleiner recounts, disagreements prevented the developing-country delegations from forming a united front.Nonetheless, development was undoubtedly an important issue at Bretton Woods, and the experience of the preceding decade created fertile soil in which to plant the concept. But this situation raises the question of why earlier historians drew the wrong conclusions. The Cold War, Helleiner suggests, redirected the attention of the United States—and its chroniclers—away from Latin America and toward monetary and economic stability in Europe (he might also have pointed to the Communist takeover of China as further diminishing the salience of the Bretton Woods developmental agenda). Financial interests hostile to the World Bank received a warmer reception from the new Truman administration. Accusations that White was a Soviet fellow traveler diminished the stature of the institutions of which he was an architect. These are intriguing arguments, although at some level they are not entirely satisfactory resolutions of the paradox.Forgotten Foundations is classic interdisciplinary history, drawing on literatures from political science and economics as well as primary sources. Even if he overstates his case, Helleiner has made an important contribution that will permanently re-frame how scholars conceptualize Bretton Woods.

The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Abstract This paper assesses the prospects for renminbi internationalisation, arguing that the process will encounter significant challenges. Some of these are familiar: the Chinese economy, while large, remains poor; China’s financial markets lack depth and liquidity; encouraging international use of the renminbi will require substantial capital account liberalisation, in the course of which things can go wrong. In addition, I highlight a less familiar challenge: China’s political system may be an obstacle to renminbi internationalisation. Since the early nineteenth century, the leading international currency or currencies have been those of countries with democratic political systems where there are constraints on the executive, which have built durable alliances, and where creditors are well represented. This is not a prediction that China must have a Democratic Spring before the renminbi becomes a leading international and reserve currency. But it does suggest that the country will have to contemplate significant political reform.

ABSTRACT We analyze disagreements over de facto exchange‐rate‐regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle‐income countries (emerging markets) and low‐income (developing) countries as opposed to advanced economies. They are most prevalent for countries with well‐developed financial markets, low reserves and open capital accounts. This suggests caution when attempting to relate the exchange rate regime to financial development, the openness of the financial account, and reserve management and accumulation decisions. Copyright © 2012 John Wiley & Sons, Ltd.

In the three decades ending around 1980, serious crises that implicated financial systems and sovereign creditworthiness were few. 2 Since then, however, crises have proliferated, along with international rescue efforts. 3 The Latin American debt crisis of the

Although the positive association between the service sector share of output and per capita income is one of the best-known regularities in all of growth and development economics, there is less than complete agreement on the nature of that association. We identify two waves of service sector growth: a first wave in countries with relatively low levels of per capita GDP; and a second in countries with higher per capita incomes. The first wave is made up primarily of traditional services, the second of modern services. In addition, there is evidence of the second wave occurring at lower income levels after 1990, especially so in democracies, in countries that are open to trade, and in countries close to global financial centres. This points to both political and economic conditions that can help countries capitalize on the opportunities afforded by a globalized post-industrial economy. Copyright 2013 Oxford University Press 2011 All rights reserved, Oxford University Press.

This paper reassesses the roles of government, business and finance in South Korea's economic growth and development. It argues that these extra-market mechanisms were each important, in their own ways, for solving coordination problems that would have otherwise posed obstacles to industrial growth. But what were solutions in the early stages of modern economic growth proved to be impediments later, as the problems that had to be solved changed but the institutions did not.

Remembering Inflation. ByBrigitte Granville. Princeton and Oxford: Princeton University Press, 2013. xvi + 272 pp. Figures, tables, references, index. Cloth, $35.00. ISBN: 978-0-691-14540-2. - Volume 88 Issue 4

History suggests that it will be some years before the United  States again sees normal levels of bank lending and liquidity. The implication is that the recovery is not going to be vigorous, says Barry Eichengreen.

“The lessons of history” were widely invoked in 2008/09 as analysts and policymakers sought to make sense of the global financial crisis. Specifically, analogies with the early stages of the Great Depression of the 1930s were widely drawn. Building on work in cognitive science and literature on foreign policy making, this article seeks to account for the influence of this particular historical analogy and asks how it shaped both perceptions and the economic policy response. It asks how historical scholarship might be better organized to inform the process of economic policymaking. It concludes with some reflections on how research in economic history will be reshaped by the crisis.

If publicity is the measure of progress, then Latin American capital markets are booming. The financial press is awash with articles on the growth of local Latin American markets. They note that capitalisation of domestic bond markets in the seven large Latin American countries more than doubled from 1995 to 2005; in the second half of the period alone, it went up by

We construct a simple model of the end of housing slumps. We show that the probability that real housing prices stop falling is higher the smaller was the pre-slump house price run-up; the greater has been the cumulative house price decline, the faster is GDP growth, and, most importantly, the lower are mortgage interest rates. Slumps are longer where the construction sector is more responsive, allowing booms to create larger supply overhangs, but shorter the more developed are financial markets and institutions, enabling new buyers to access credit and enter the market. Falling house prices can lead to lower private sector credit flows, in turn limiting the scope for new home purchases and creating the danger of a vicious spiral of slumping housing prices and distressed financial institutions. This suggests that policymakers should take steps to break the link between the housing market problems and banking problems by intervening to recapitalize distressed banking systems while using quantitative easing and credit easing to lower mortgage interest rates and help revive the housing market directly.— Agustín S. Bénétrix, Barry Eichengreen and Kevin H. O'Rourke

This case speaks to several issues that arise in connection with central banking and monetary policy today. A first issue is international currency competition. It is widely argued that there is only room for one international currency in the global system. The theoretical assertion is that increasing returns to using a national currency in international transactions are strong; network externalities are pronounced. The empirical assertion is that the pound sterling dominated international transactions in the first half of the 20 th century, the dollar in its second half. In recent work we have shown that this last assertion is not accurate for foreign-exchange reserves: sterling and the dollar shared the reserve-currency role more or less equally in the 1920s and 1930s. 2

The relationship between democracy and globalization has been a subject of both scholarly and policy debate. Some argue that the two go hand in hand – that unrestricted international transactions encourage political accountability and transparency and that politically free societies are least likely to restrict the mobility of goods and services. But others argue that democracies, in which special interests that suffer from foreign competition have voice, are more likely to have closed markets, and vice versa. Our analysis differs from its predecessors in three ways. We seek to uncover general patterns by considering as long a period as possible and all countries with the relevant data. We consider multiple dimensions of globalization, analyzing both trade liberalization and capital account liberalization. And we estimate these relationships using an instrumental variables strategy that allows us to confront the issue of simultaneity. Our findings support the existence of positive relationships between democracy and globalization.