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At the Bretton Woods Conference in July 1944, international leaders sought to insure a stable post-war international economic environment by creating a fixed exchange rate system.
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Table of Contents Introduction 2 The Monetary Model and Devaluation 2 The effect of devaluation in the Mundell - Fleming model 2 Why do Monetary and Mundell-Fleming models result in different outcomes in terms of devaluation effectiveness? 2 Bibliography 2 Introduction At the Bretton Woods Conference in July 1944, international leaders sought to insure a stable post-war international economic environment by creating a fixed exchange rate system. The United States played a leading role in the new arrangement, with the value of other currencies fixed in relation to the dollar and the value of the dollar fixed in terms of gold - $35 an ounce. Following the Bretton Woods agreement, the United States authorities took actions to hold down the growth of foreign central bank dollar reserves to reduce the pressure for conversion of official dollar holdings into gold. [1] Under a fixed exchange rate system, only a decision by a country's government or monetary authority can alter the official value...
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