Fetters of Gold and Paper

32 Pages Posted: 26 Jul 2010 Last revised: 10 Oct 2021

See all articles by Barry Eichengreen

Barry Eichengreen

University of California, Berkeley; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Peter Temin

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2010

Abstract

We describe in this essay why the gold standard and the euro are extreme forms of fixed exchange rates, and how these policies had their most potent effects in the worst peaceful economic periods in modern times. While we are lucky to have avoided another catastrophe like the Great Depression in 2008-9, mainly by virtue of policy makers' aggressive use of monetary and fiscal stimuli, the world economy still is experiencing many difficulties. As in the Great Depression, this second round of problems stems from the prevalence of fixed exchange rates. Fixed exchange rates facilitate business and communication in good times but intensify problems when times are bad.

Suggested Citation

Eichengreen, Barry and Temin, Peter, Fetters of Gold and Paper (July 2010). NBER Working Paper No. w16202, Available at SSRN: https://ssrn.com/abstract=1648002

Barry Eichengreen (Contact Author)

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Peter Temin

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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