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Democratic Constraints and Adherence to the Classical Gold Standard

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  • Kramer, Bert S.
  • Milionis, Petros

    (Groningen University)

Abstract

We study how domestic politics affected the decisions of countries to adhere to the classical gold standard. Using a variety of econometric techniques and controlling for a wide range of economic factors, we demonstrate that political constraints were important in the decision of countries to adopt the gold standard as well as in the decision to suspend it. Specifically we find that the probability of adherence to the gold standard was ceteris paribus lower for countries in which domestic politics were organized in a more open and democratic fashion. This effect appears to be driven largely by the extent of domestic political competition and was particularly relevant for peripheral countries.

Suggested Citation

  • Kramer, Bert S. & Milionis, Petros, 2018. "Democratic Constraints and Adherence to the Classical Gold Standard," GGDC Research Memorandum GD-175, Groningen Growth and Development Centre, University of Groningen.
    • Handle: RePEc:gro:rugggd:gd-175
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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