The Gold Standard as a Rule

55 Pages Posted: 15 Sep 2010

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Finn Kydland

Carnegie Mellon University - David A. Tepper School of Business; Norwegian School of Economics (NHH) - Department of Economics

Date Written: May 1990

Abstract

In this paper, we show that the monetary rule followed by a number of key countries, especially England and to a lesser extent the U. S., before 1914 represented a commitment technology preventing the monetary authorities from changing planned future policy. The experiences of these major countries suggest that the gold standard was intended as a contingent rule. By that, we mean, that the authorities could temporarily abandon the fixed price of gold during a wartime emergency on the understanding that convertibility at the original price of gold would be restored when the emergency passed. The experiences of other countries, however, suggest that the gold standard rule was often viewed more as a desirable goal than an operational constraint.

Suggested Citation

Bordo, Michael D. and Kydland, Finn E., The Gold Standard as a Rule (May 1990). NBER Working Paper No. w3367. Available at SSRN: https://ssrn.com/abstract=1677248

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Finn E. Kydland

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412 268-3691 (Phone)
412 268-7357 (Fax)

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

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