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The Role of the Gold Standard in Keynesian Monetary Theory


  • Sumner, Scott


This paper shows that many of the most distinctive features of Keynesian economics are best understood if one views the General Theory as essentially a gold standard model. A close examination of Keynes's statements on contemporaneous policy issues suggests that the gold standard had a profound impact on his views on monetary policy effectiveness. In particular, I show that the liquidity trap has been widely misunderstood. Finally, I argue that post-General Theory developments in Keynesian economics are best understood as a response to the inapplicability of Keynes's original message to a world of fiat money regimes. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Sumner, Scott, 1999. "The Role of the Gold Standard in Keynesian Monetary Theory," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 527-540, July.
  • Handle: RePEc:oup:ecinqu:v:37:y:1999:i:3:p:527-40

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    Cited by:

    1. Sebastian Edwards, 2018. "Keynes on the Sequencing of Economic Policy: Recovery and Reform in 1933," NBER Working Papers 24367, National Bureau of Economic Research, Inc.
    2. Mitchell, Daniel J. B., 2000. "Dismantling the cross of gold: economic crises and U.S. monetary policy," The North American Journal of Economics and Finance, Elsevier, vol. 11(1), pages 77-104, August.

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