The efficiency and stability of revived Bretton Woods system during the economic crisis

Abstract

The purpose of this paper is to examine the stability of the revived Bretton Wood System(BW2). During the economic crisis, people became concerned about the stability and efficiency of the new-born system. The paper focuses on the interactions among the participating countries. During the period of crisis, the United States applied measures to resolve the crisis and keep the equilibrium of the vulnerable system. By testing whether the severe inflation in China was related to the U.S. reactions or not, the stability of the BW2 is obvious. After resolving the stationarity and cointegration analysis and data selections, the outcomes of the regression illustrated that those measures were the causes of Chinese serious inflation and execrated the inflation. Granger causality exists among Chinese inflation and American monetary and fiscal policies.