Currency Crisis and Unemployment: Sterling in 1931
AbstractThis paper studies the role of unemployment in sterling’s inter-war experience. According to most narrative accounts, the proximate cause of the 1931 sterling crisis was a high and rising unemployment rate that placed pressure on British governments to pursue reflationary policies. We present a model which, in the spirit of the ‘second generation’ approach to currency crises, highlights the conflict between the objective of low unemployment and defence of the currency and show that it can reproduce the main features of sterling’s inter-war experience. Econometric evidence lends further support to the view that the proximate cause of the sterling crisis was the dramatic rise in unemployment caused by external deflationary forces.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1898.
Date of creation: Jun 1998
Date of revision:
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Other versions of this item:
- Barry Eichengreen & Olivier Jeanne, 1998. "Currency Crisis and Unemployment: Sterling in 1931," NBER Working Papers 6563, National Bureau of Economic Research, Inc.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
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