Guillaume Bazot

2026-25

Where It All Begins: Eurodollars and International Monetary Policy Transmission under Bretton Woods

Guillaume Bazot, Eric Monnet, Matthias Morys

Abstract The origins of modern financial globalization are often traced to the emergence of the Eurodollar market in the 1960s, but its implications for monetary policy under Bretton Woods remain unclear. This paper revisits international monetary transmission between 1948 and 1971 using a new monthly series of exogenous U.S. monetary policy shocks based on unanticipated daily changes in the Fed discount rate. We show that U.S. monetary tightening strongly affected U.S. inflation, output, and unemployment, while attracting capital inflows primarily through borrowing Eurodollars from the foreign branches of U.S. banks. After the restoration of current account convertibility in 1958, U.S. monetary shocks also increased Eurodollar and foreign interest rates, pointing to growing international financial integration. However, they had no significant effects on foreign output or credit, suggesting that domestic financial regulation and market segmentation continued to insulate Japanese and European economies from international shocks despite the expansion of offshore dollar markets.

Keywords US monetary policy shocks, International monetary transmission, Trilemma, Financial globalization, Capital controls, Eurodollar market, Bretton Woods system

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2025-03

A decomposition of the labor share decline in the US business sector

Guillaume Bazot, David Guerreiro

Abstract Based on the calibration of a simple model, we decompose the decline in the labor share into four structural components: task displacement, labor rents, capital rents, and labor-capital substitution effect. Our estimation suggests that task displacement and the switch of distributed rents from labor to capital are the main drivers of the labor share decline over the past three decades. On the other hand, the neoclassical substitution effect seems not to have a long term impact on the labor share.

Keywords Productivity, Rate of return on capital, Markup, Capital rents, Labor rents, Automation, Task displacement, Labor share

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