Bretton‐woods Systems, Old and New, and the Rotation of Exchange‐rate Regimes*

A recent contribution to the literature argues that the present international monetary system operates like the Bretton‐Woods system. Asia is the new periphery of the system and pursues an export‐led development strategy based on undervalued exchange rates and accumulated foreign reserves. The USA remains the centre country, pursuing a monetary‐policy strategy that does not take external factors into account in conducting monetary policy. We test this hypothesis and also present a new method for decomposition of a time series using a time‐varying business coefficient technique that allows us to test the relationship between the cycle and macroeconomic policies under both regimes.