Scylla and Charybdis - Explaining Europe's Exit from Gold, January 1928 - December 1936

Abstract

The paper examines the timing of exit from the interwar gold-exchange standard for a panel of European countries, based on monthly data over the period January 1928 - December 1936. I show that exit from gold can be understood in terms of a trade-off between a limited set of factors commonly suggested in the theoretical literature on currency crises. A simple and parsimonious econometric framework that nests various hypotheses allows me to predict the month of exit in the 1930s, except for France. I consider the separate cases of France and Poland to show my results shed light on country-specific debates.

Keywords: gold-exchange standard, interwar period, Europe

JEL Classification: E42, E44, N14