Variability of Prices, Output and Money Under Fixed and Fluctuating Exchange Rates: An Empirical Study of Monetary Regimes in Japan and the United States

The closing of the gold window at the U.S. Treasury, announced in mid-August 1971, formally ended the Bretton Woods system of fixed but adjustable exchange rates. In Japan, the shift in regime and measures accompanying the shift are known as the "Nixon shock." The shock initially increased uncertainty in Japan, and elsewhere. Negotiations to reestablish fixed exchange rates at new parities eventually produced a new agreement that soon collapsed. In March 1973, major countries abandoned efforts to restore a fixed exchange rate regime.