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The Stability of the Gold Standard and the Evolution of the International Monetary System

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  • Tamim Bayoumi and Barry Eichengreen.

Abstract

This paper examines some popular explanations for the smooth operation of the pre-1914 gold standard. We find that the rapid adjustment of economies to underlying disturbances played an important role in stabilizing output and employment under the gold standard system, but no evidence that this success also reflected relatively small underlying disturbances. Finally, the paper also suggests an explanation for the evolution of the international monetary system based on growing nominal inertia over time.
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Suggested Citation

  • Tamim Bayoumi and Barry Eichengreen., 1994. "The Stability of the Gold Standard and the Evolution of the International Monetary System," Center for International and Development Economics Research (CIDER) Working Papers C94-040, University of California at Berkeley.
    • Handle: RePEc:ucb:calbcd:c94-040
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    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
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    9. Michael D. Bordo, 1993. "The gold standard, Bretton Woods and other monetary regimes: a historical appraisal," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 123-191.
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    Cited by:

    1. Frankel, J-A & Rose, A-K, 1996. "Economic Structure and the Decision to Adopt a Common Currency," Papers 611, Stockholm - International Economic Studies.
    2. Barry Eichengreen., 1994. "History and Reform of the International Monetary System," Center for International and Development Economics Research (CIDER) Working Papers C94-041, University of California at Berkeley.
    3. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1994. "Speculative Attacks on Pegged Exchange Rates: An Empirical Exploration with Special Reference to the European Monetary System," CEPR Discussion Papers 1060, C.E.P.R. Discussion Papers.
    4. Bardhan, Pranab, 1996. "The Nature of Institutional Impediments to Economic Development," Department of Economics, Working Paper Series qt8w12j7q1, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    5. Jeffrey A. Frankel & Andrew K. Rose, 1994. "A Survey of Empirical Research on Nominal Exchange Rates," NBER Working Papers 4865, National Bureau of Economic Research, Inc.
    6. Ola Grytten & Arngrim Hunnes, 2009. "Price stability and inflation persistence during the international gold standard: The Scandinavian case," Working Paper 2009/20, Norges Bank.
    7. Bayoumi, Tamim & Bordo, Michael D, 1998. "Getting Pegged: Comparing the 1879 and 1925 Gold Resumptions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 122-149, January.
    8. Frankel, Jeffrey A, 1996. "Recent Exchange-Rate Experience and Proposals for Reform," American Economic Review, American Economic Association, vol. 86(2), pages 153-158, May.
    9. Frankel, Jeffrey A. & Rose, Andrew K., 1996. "A panel project on purchasing power parity: Mean reversion within and between countries," Journal of International Economics, Elsevier, vol. 40(1-2), pages 209-224, February.
    10. Colin McKenzie, 2006. "Australia's Deflation in the 1890s," Discussion papers 06017, Research Institute of Economy, Trade and Industry (RIETI).
    11. Obstfeld, Maurice, 1996. "Intertemporal price speculation and the optimal current-account deficit: reply and clarification," Journal of International Money and Finance, Elsevier, vol. 15(1), pages 141-147, February.
    12. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-172, January.
    13. Eichengreen, Barry & Flandreau, Marc, 1994. "The Geography of the Gold Standard," Center for International and Development Economics Research (CIDER) Working Papers 233393, University of California-Berkeley, Department of Economics.
    14. Mercea Handro Patricia Amalia, 2017. "Opinions On International Reserves Management - Post Crisis," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 246-252, December.
    15. Eichengreen, Barry, 1994. "The Bretton Woods System: Paradise Lost?," Center for International and Development Economics Research (CIDER) Working Papers 233394, University of California-Berkeley, Department of Economics.
    16. Nephil Matangi Maskay, 2000. "A cautionary note in using patterns of shocks to determine optimal exchange rate policy. An exploration of Nepalese and Indian exchange rate relations: 1964-1994," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 491-497.
    17. Eichengreen, Barry & Wyplosz, Charles, 1995. "What Do Currency Crises Tell Us About the Future of the International Monetary System?," Center for International and Development Economics Research (CIDER) Working Papers 233418, University of California-Berkeley, Department of Economics.
    18. Frankel, Jeffrey & Wyplosz, Charles, 1995. "A Proposal to Introduce the ECU First in the East," Center for International and Development Economics Research (CIDER) Working Papers 233415, University of California-Berkeley, Department of Economics.
    19. Abdoulganiour Almame Tinta, 2017. "The determinants of participation in global value chains: The case of ECOWAS," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1389252-138, January.
    20. Bardhan, Pranab, 1996. "The Nature of Institutional Impediments to Economic Development," Center for International and Development Economics Research (CIDER) Working Papers 233429, University of California-Berkeley, Department of Economics.
    21. Eichengreen, Barry, 1995. "Sterling in Decline Again: The 1931 and 1992 Crises Compared," Center for International and Development Economics Research (CIDER) Working Papers 233404, University of California-Berkeley, Department of Economics.
    22. Luis A. V. Catão & Solomos N. Solomou, 2005. "Effective Exchange Rates and the Classical Gold Standard Adjustment," American Economic Review, American Economic Association, vol. 95(4), pages 1259-1275, September.
    23. Michael D. Bordo & Barry Eichengreen, 1998. "The Rise and Fall of a Barbarous Relic: The Role of Gold in the International Monetary SYstem," NBER Working Papers 6436, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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