TY  - JOUR
AU  - Bordo, Michael D
AU  - Eichengreen, Barry
TI  - Bretton Woods and the Great Inflation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14532
PY  - 2008
Y2  - December 2008
DO  - 10.3386/w14532
UR  - http://www.nber.org/papers/w14532
L1  - http://www.nber.org/papers/w14532.pdf
N1  - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu

Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
M1  - published as Michael Bordo, Barry Eichengreen. "Bretton Woods and the Great Inflation," in Michael D. Bordo and Athanasios Orphanides, editors, "The Great Inflation: The Rebirth of Modern Central Banking" University of Chicago Press (2013)

AB  - In this paper we show that the acceleration of inflation in the United States after 1965 reflected a shift in perceived responsibility for managing the country's international financial position.  Prior to 1965 this responsibility was lodged primarily with the Fed, whose policies resembled those of a central bank playing by the gold standard rules of the game.  Over time, however, this responsibility was increasingly assumed by the Treasury, while the Federal Reserve acquired increasing room for maneuver as a result of the adoption of the Interest Equalization Tax and other policies with effects analogous to capital controls.  Once the external constraint shaped policy less powerfully, the Fed pursued other goals more aggressively, resulting in more inflationary pressure.  We document these points with a quantitative and qualitative analysis of the minutes of the Federal Open Market Committee.
ER  -