Download A Retrospective on the Classical Gold Standard, 1821-1931 by Michael D. Bordo, Anna J. Schwartz PDF

By Michael D. Bordo, Anna J. Schwartz

This can be a well timed evaluate of the most suitable protecting the one hundred ten years of its operation till 1931, whilst Britain deserted it in the course of the melancholy. present dissatisfaction with floating premiums of alternate has spurred curiosity in a go back to a commodity commonplace. The reports during this quantity have been designed to realize a greater knowing of the historic most useful, yet additionally they throw mild at the query of no matter if restoring it at the present time may possibly support treatment inflation, excessive rates of interest, and occasional productiveness progress. the amount incorporates a assessment of the literature at the classical best; experiences the event with gold in England, Germany, Italy, Sweden, and Canada; and views on foreign linkages and the steadiness of price-level tendencies below the optimal. The articles and commentaries replicate robust, conflicting perspectives between hte contributors on problems with imperative financial institution habit, purchasing-power an interest-rate parity, self sustaining financial regulations, financial progress, the "Atlantic economy," and traits in commodity costs and long term rates of interest. this can be a considerate and provocative booklet.

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Extra resources for A Retrospective on the Classical Gold Standard, 1821-1931 (National Bureau of Economic Research Conference Report)

Example text

Ultimately, which goods serve as vehicles for arbitrage is an empirical question. The answer depends on the total costs of arbitrage, including information costs. In the eighteenth and early nineteenth centuries, gold was the commodity with the lowest arbitrage costs, hence gold flows rapidly kept gold prices in line and other goods prices followed. Later in the nineteenth century, with improvements in communications technology and the development of international securities and commodity markets, arbitrage in securities and traded commodities reduced the role for gold flows in the adjustment mechanism.

Finally, in the postwar period, operating in an institutional environment far enough removed from the events before 1914, scholars of the gold standard could objectively ask how the gold standard in its many aspects worked. Armed with new theoretical and statistical tools and new compilations of data, the consensus of this work has been that the international gold standard did function smoothly in the sense of ensuring international price harmony, in allowing the international transfer of resources, and in maintaining balance-of-payments equilibria for most countries over long periods of time, but that many elements of the story-particularly the operation of the price-specie-flow mechanism and the importance of the rules of the game-were subject to doubt.

For the central bank to intervene and shield the domestic money supply from external shocks. , Ricardo's gold-bullion standard. Finally, schemes were designed to separate the medium-of-exchange function of gold from the store-of-value function. All these proposals attempted to rectify an important defect of the gold standard-basing a nation's money supply on one commodity subject to changing demand and supply conditions. Schemes along these lines included creation of a tabular standard, bimetallism, symmetallism, and Fisher's (1920) compensated dollar.

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