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The Gold-Exchange Standard and the Great Depression

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  • Barry Eichengreen

Abstract

A number of explanations for the severity of the Great Depression focus on the malfunctioning of the international monetary system. One such explanation emphasizes the deflationary monetary consequences of the liquidation of foreign-exchange reserves following competitive devaluations by Great Britain and her trading partners. Another emphasizes instead the international monetary policies of the Federal Reserve and the Rank of France. This paper analyzes both the exceptional behavior of the U.S. and France and the shift out of foreign exchange after 1930. While both Franco-American gold policies and systemic weaknesses of the international monetary system emerge as important factors in explaining the international distribution of reserves, the first of these factors turns out to play the more important role in the monetary stringency associated with the Great Depression.

Suggested Citation

  • Barry Eichengreen, 1987. "The Gold-Exchange Standard and the Great Depression," NBER Working Papers 2198, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2198
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    1. Frenkel, Jacob A, 1974. "The Demand for International Reserves by Developed and Less-Developed Countries," Economica, London School of Economics and Political Science, vol. 41(161), pages 14-24, February.
    2. Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
    3. Eichengreen, Barry & Watson, Mark W & Grossman, Richard S, 1985. "Bank Rate Policy under the Interwar Gold Standard: A Dynamic Probit Model," Economic Journal, Royal Economic Society, vol. 95(379), pages 725-745, September.
    4. Eichengreen, Barry & Sachs, Jeffrey, 1986. "Competitive devaluation and the Great Depression : A theoretical reassessment," Economics Letters, Elsevier, vol. 22(1), pages 67-71.
    5. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    6. Fremling, Gertrud M, 1985. "Did the United States Transmit the Great Depression to the Rest of the World?," American Economic Review, American Economic Association, vol. 75(5), pages 1181-1185, December.
    7. Peter Temin, 1971. "The Beginning of the Depression in Germany," Economic History Review, Economic History Society, vol. 24(2), pages 240-248, May.
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    Cited by:

    1. Fratianni, Michele & Giri, Federico, 2017. "The tale of two great crises," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 5-31.
    2. Michael D. Bordo, 1989. "The Contribution of "A Monetary History of the United States, 1867-1960" to Monetary History," NBER Chapters, in: Money, History, and International Finance: Essays in Honor of Anna J. Schwartz, pages 15-78, National Bureau of Economic Research, Inc.

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