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

September 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Commodities, Economic theory, Exchange rate arrangements, Exchange rates, Foreign exchange, Gold, International monetary system, Money, Supply shocks

Keywords: aggregate demand, aggregate demand demand schedule, aggregate supply, aggregate supply supply curve, aggregate supply supply schedule, aggregate-supply-aggregate-demand framework, Europe, Exchange rate arrangements, Exchange rates, framework of the paper, Gold, gold standard, gold standard country, gold standard system, gold standard year, International monetary system, price, short-run aggregate supply supply curve, Supply shocks, WP

Pages:
32
Volume:
1995
DOI:
https://doi.org/10.5089/9781451851243.001
Issue:
089
Series:
Working Paper No. 1995/089
Stock No:
WPIEA0891995
ISBN:
9781451851243
ISSN:
1018-5941

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