Journal Article

Macroeconomic Performance in the Bretton Woods Era and After

Gavin Cameron and Chris Wallace

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 18, issue 4, pages 479-494
Published in print December 2002 | ISSN: 0266-903X
Published online December 2002 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/18.4.479
Macroeconomic Performance in the Bretton Woods Era and After

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  • Economic Development and Growth
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During the Bretton Woods era, OECD countries grew at historically unprecedented rates. This Golden Age has many possible explanations, ranging from the return to liberal policies in international trade to a backlog of profitable growth opportunities after the neglect of the 1930s and wartime damage. Eichengreen (1996) has argued that the proximate cause of the rapid growth was high investment, and that this high investment was made possible by certain institutions that were particularly well suited to reconstruction and growth. On the domestic side, these institutions led to high investment rates and moderate wage claims. This paper interprets the interaction between unions and firms as a coordination game. The risk‐dominant equilibrium is selected via a global game argument. Only small changes to the payoffs are necessary to explain a change in the selected equilibrium and, therefore, the growth slowdown.

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Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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