China's Role in the Revived Bretton Woods System: A Case of Mistaken Identity

Working Paper
March 2005

According to a popular argument put forward by three Deutsche Bank economists (Dooley, Folkerts-Landau, and Garber, hereafter DFG), one needn’t worry about the sustainability of either the large US current account deficit or the undervalued exchange rates of a group of Asian economies (Dooley, Folkerts-Landau, and Garber 2003, 2004a, 2004b, 2004c; Folkerts-Landau 2004). In their view, the United States and the Asian economies have entered into an implicit contract—the so-called revived Bretton Woods system (hereafter BW2)—that can comfortably carry on for another decade or two, with significant net benefits to both parties.

More From

Morris Goldstein Former Research Staff
Nicholas R. Lardy Senior Research Staff