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Do old habits die hard? Central banks and the Bretton Woods gold puzzle

Abstract : We assess the importance of individual and institutional experience in shaping macroeconomic policy by studying the persistence of gold standard monetary practices in the Bretton Woods system. Using new data from the IMF archives, we show that, although they were not required to, countries continued to back currency in circulation with gold. The longer an institution spent in the gold standard (and the older the policymakers), the tighter the link between gold and currency. Such “old habits” prevented dollars and gold from working as perfect substitutes and ultimately contributed to the demise of the Bretton Woods system. Our findings highlight the persistence of past practices, even in the face of radical institutional change, and its consequences on the international monetary system.
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Contributor : Caroline Bauer <>
Submitted on : Tuesday, October 20, 2020 - 6:21:21 PM
Last modification on : Thursday, January 28, 2021 - 9:42:03 AM

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Eric Monnet, Damien Puy. Do old habits die hard? Central banks and the Bretton Woods gold puzzle. Journal of International Economics, Elsevier, 2020, 127, ⟨10.1016/j.jinteco.2020.103394⟩. ⟨halshs-02973035⟩



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