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Going Dutch: The management of monetary policy in the Netherlands during the interwar gold standard

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  • Colvin, Christopher L.
  • Fliers, Philip

Abstract

Under what conditions can policymakers make demonstrably poor policy choices? By providing a new account of monetary policy management in the Netherlands during the interwar gold standard, we show how policymakers can fail to escape their long-held beliefs and refuse to consider available policy alternatives. Using high-frequency macroeconomic data, we are the first to document that the Netherlands' policymakers were able to conduct an independent monetary policy in the 1930s. We then show how this independence was squandered on fixing the guilder's exchange rate, a policy which led only to deflation, trade deficits, corporate bankruptcies and mass unemployment. We explain the government's policy stance by documenting the beliefs of politicians and central bankers, and then by investigating how business leaders and public intellectuals attempted to influence these beliefs.

Suggested Citation

  • Colvin, Christopher L. & Fliers, Philip, 2019. "Going Dutch: The management of monetary policy in the Netherlands during the interwar gold standard," QUCEH Working Paper Series 2019-03, Queen's University Belfast, Queen's University Centre for Economic History.
    • Handle: RePEc:zbw:qucehw:201903
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    References listed on IDEAS

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    1. Thomas, Ryland & Hills, Sally & Dimsdale, Nicholas, 2010. "The UK recession in context — what do three centuries of data tell us?," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 277-291.
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    Cited by:

    1. Christie Swanepoel & Philip T. Fliers, 2021. "The fuel of unparalleled recovery: Monetary policy in South Africa between 1925 and 1936," Economic History of Developing Regions, Taylor & Francis Journals, vol. 36(2), pages 213-244, May.
    2. Colvin, Christopher L. & Winfree, Paul, 2019. "Applied history, applied economics, and economic history," QUCEH Working Paper Series 2019-07, Queen's University Belfast, Queen's University Centre for Economic History.
    3. Weinan Yan, 2022. "Inequality and the Interwar Gold Standard," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 48(1), pages 90-121, January.

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    More about this item

    Keywords

    monetary policy; exchange rate policy; gold standard; interwar period; the Netherlands;
    All these keywords.

    JEL classification:

    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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