A new perspective on the Gold Standard: Inflation as a population phenomenon
AbstractThe purpose of this paper is to contribute a new model of the Gold Standard, focusing on the interaction between resource scarcity and demographics. In a dynamic micro-founded model we find that: i) prices and equilibrium gold holdings increase with population (a scale effect), but decrease with the population growth rate; ii) that the Gold Standard implies deflation unless extraction resources outstrip population growth; and iii) there is no optimal quantity of money. The predictions of the model are examined using a structural VAR. Our results also shed light on debates about the viability of a return to the Gold Standard, and, more generally, on the interaction between policy variables and scarce resources.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Money and Finance.
Volume (Year): 31 (2012)
Issue (Month): 6 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30443
Gold Standard; Cagan-Keynes; Labor; Extraction; Scarcity; Inflation; Deflation; Population dynamics;
Other versions of this item:
- Joao Ricardo Faria & Peter McAdam, 2012. "A new perspective on the Gold Standard: Inflation as a population phenomenon," School of Economics Discussion Papers 0412, School of Economics, University of Surrey.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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