These results were quite inconsistent under the initial Bretton Woods system. Giovannini’s this procedure of running this test faced few problems; we will be dealing with notably two. Starting off with, the sample he worked with, ignored the most flourishing period of the Bretton Woods system i.e. 'heyday'. It started in 1962, mistakenly assumed to be in 1959, when most of the currency of Europe turned convertible, extended even after 1968, the year in which there was a fall down of the gold-pool agreement and the centre country removed obligation on Federal Reserve remarks. Secondly, Giovennini’s data collected from the International Financial Statistics (IFS) for international funds; don't include gold which is a big drawback to his test. The test done excluding gold could be applied the post Bretton Woods phase, but it can't be apply during the Bretton-Woods system as gold played a vital role in conserving the reserves. To deal with the above problems, Bank Of Greece(2010) re-anticipated Giovannini’s regressions with the four sample countries in the above mentioned years , note that the tables are given in the appendix, with an account of gold which was previously ignored in the test to see the reserves after the decline of Bretton Woods system. Japan was also included as a new …show more content…
On contrast the periphery countries was not supportive of this hypothesis. In the rising period the boundary countries did support this hypothesis but it’s also true that the results are mostly assumptions and there could be a high probability of rejecting this hypothesis when it’s true and vice versa, as the sample test is very minor