... and currency boards.) In this essay, we will initially compare macroeconomic policy toward the current account under Bretton Woods with some of the current mechanisms. We will then discuss the validity of the statement in the title and assess the importance of balance of payments for the economic well being of a country. The agreement at Bretton Woods in 1944 re-established fixed (but adjustable) exchange rates between currencies in the form of so-called 'par values', defined in terms of gold. Countries were obliged to intervene in the market to maintain the exchange rate within 1% either side of its par value without permission of the IMF and by more than 10% if it was convinced that the balance of payments of the country concerned was in fundamental disequilibrium. In theory balance-of-payments adjustment under a gold exchange system is supposed to work in the same way as under the gold standard, with ...

See this essay or coursework document in full right now