The inter–war gold exchange standard: Credibility and monetary independence
TL;DR: In this paper, the authors analyzed the operation of the interwar gold exchange standard to see if the evident credibility of the system conferred on participating central banks the ability to pursue independent monetary policies.
About: This article is published in Journal of International Money and Finance.The article was published on 2003-02-01 and is currently open access. It has received 29 citations till now. The article focuses on the topics: Interest rate parity & Covered interest arbitrage.
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TL;DR: This article showed that industrial metals, especially copper, tend to outperform gold and other precious metals as hedging vehicles and safe haven assets against losses in sovereign bonds and that copper is the best performing metal in the period immediately after negative bond price shocks.
Abstract: It is a commonly held view that gold protects investors’ wealth in the event of negative economic conditions. In this study, we test whether other metals offer similar or better investment opportunities in periods of market turmoil. Using a sample of 13 sovereign bonds, we show that other precious metals, palladium in particular, offer investors greater compensation for their bond market losses than gold. We also find that industrial metals, especially copper, tend to outperform gold and other precious metals as hedging vehicles and safe haven assets against losses in sovereign bonds. However, the outcome of the hedge and safe haven properties is not always consistent across the different bonds. Finally, our analysis suggests that copper is the best performing metal in the period immediately after negative bond price shocks.
113 citations
Cites background from "The inter–war gold exchange standar..."
...There is already strong evidence that gold protects investors’ wealth during times of uncertainty and instability (Wallace and Choudhry, 1995; Davidson et al., 2003; Bordo and MacDonald, 2003; Baur and Lucey, 2010 and Baur, 2013)....
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...There is already strong evidence that gold protects investors’ wealth during times of uncertainty and instability (Wallace and Choudhry, 1995; Davidson et al., 2003; Bordo and MacDonald, 2003; Baur and Lucey, 2010 and Baur, 2013)....
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TL;DR: This article proposed a discrete time duration model (using a panel data set of 24 countries for 1928-1936) to analyze how economic and political indicators affected a country's term on the gold standard.
Abstract: Economic historians have devoted enormous attention to the collapse of the interwar gold standard. This article proposes a discrete time duration model (using a panel data set of 24 countries for 1928–1936) to analyze how economic and political indicators affected a country's term on the gold standard. High per capita income, international creditor status, and prior hyperinflation increased the probability of continuation. In contrast, democratic regimes left early. Unemployment, sterling group membership, higher inflation, and the experience of banking crises reduced the time a country remained on the gold standard. This study also predicts sample countries' survival probabilities.
76 citations
Dissertation•
15 Jan 2016
TL;DR: In this paper, the authors discuss the influence of the endettement public on the development of the French economy and its effect on the country's finances, in particular on the adoption of the Endettement Public.
Abstract: Pour comprendre les enjeux li´es `a l’endettement public dans la cr´edibilit´e des accords mon´etairesdans le cas de l’entre-deux-guerres, nous ´etudierons l’influence de l’endettement public sur l’´etalon-or,de sa fondation dans la seconde moiti´e du XIXe si`ecle, `a son abandon au cours de la grande d´epression.La qualit´e des finances publiques, en particulier l’endettement public, fut d´eterminante dans la capacit´ed’une nation `a adh´erer `a cet accord mon´etaire. L’endettement public joua aussi un rˆole d´ecisif dans lafin de ces syst`emes mon´etaires, `a l’issue de la Grande Guerre et lors de la grande d´epression. Dans unsecond temps, notre d´emarche consistera `a comprendre les m´ecanismes qui conduisirent l’endettementpublic `a ˆetre en partie responsable de la fin de l’´etalon de change-or et de l’´emergence de nouveauxblocs mon´etaires dans les ann´ees trente. Face `a la grande d´epression, les modalit´es d’organisation et defonctionnement de cet accord mon´etaire, rendirent impossible son maintien. Si les variables ´economiqueset politiques furent d´eterminantes dans son abandon, celles d’endettement public jou`erent aussi. Apr`esavoir d´ecrit les modalit´es de sortie de l’´etalon de change-or, nous montrerons les m´ecanismes th´eoriquesqui lient les crises mon´etaires et les crises d’endettement et les appliquerons `a la grande d´epression. Nous´etudierons en particulier le cas de la France. Nous montrerons `a l’aide d’un mod`ele de dur´ee, l’influencede la dette publique dans le maintien des parit´es-or pendant la crise. Enfin, nous verrons comment denouveaux blocs mon´etaires se form`erent.
49 citations
Posted Content•
TL;DR: In this paper, the authors provide empirical measures of central bank credibility and augment these with historical narratives from eleven countries, focusing on measures of inflation expectations, the mean reversion properties of inflation, and indicators of exchange rate risk.
Abstract: In this paper we provide empirical measures of central bank credibility and augment these with historical narratives from eleven countries. To the extent we are able to apply reliable institutional information we can also indirectly assess their role in influencing the credibility of the monetary authority. We focus on measures of inflation expectations, the mean reversion properties of inflation, and indicators of exchange rate risk. In addition we place some emphasis on whether credibility is particularly vulnerable during financial crises, whether its evolution is a function of the type of crisis or its kind (i.e., currency, banking, sovereign debt crises). We find credibility changes over time are frequent and can be significant. Nevertheless, no robust empirical connection between the size of an economic shock (e.g., the Great Depression) and loss of credibility is found. Second, the frequency with which the world economy experiences economic and financial crises, institutional factors (i.e., the quality of governance) plays an important role in preventing a loss of credibility. Third, credibility shocks are dependent on the type of monetary policy regime in place. Finally, credibility is most affected by whether the shock can be associated with policy errors.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
44 citations
References
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138 citations
Book•
10 Apr 2006
TL;DR: The monetary history of the United Kingdom is described in this article, which contains monetary series ranging from detailed balance sheet material to monetary aggregates such as M3 and are in monthly, quarterly and annual form.
Abstract: This book is the culmination of a major research programme on the monetary history of the United Kingdom.
This volume contains monetary series ranging from detailed balance sheet material to monetary aggregates such as M3 and are in monthly, quarterly and annual form. The data are drawn mostly from primary sources in the early part of the period and from more accessible published sources for more recent years. Critiques of existing series are given and assessments of the value of different sources are provided. The user should be able to build his/her own series from the basic constituents given here.
This sources and assessment of data should be an essential reference to economic historians and applied economists with an interest and use to the students of money and banking and to monetary economists of other countries. This classic book was first published in 1985.
136 citations
30 May 1996
TL;DR: In this paper, the authors present an analysis of the relationship between exchange-market integration and the theory of market efficiency, and empirically test the market efficiency of different market efficiency measures.
Abstract: List of figures List of tables Preface List of symbols 1. Introduction Part I. Monetary Standards: 2. The various monetary standards 3. American monetary standard 4. British monetary standard Part II. Exchange Rate: 5. Parity 6. Exchange-rate data 7. Exchange-market integration Part III. Gold Points: 8. Gold points: theory and practice 9. Gold-point estimates Part IV. External and Internal Integration: 10. External integration 11. Internal integration Part V. Market Efficiency: 12. Theory of market efficiency 13. Empirical testing of market efficiency Part VI. Regime Efficiency 14. Market forces 15. Policy variables 16. Net outcome Part VII. Conclusions: 17. Summary and conclusions Notes References Index.
133 citations
TL;DR: In this article, the authors argue that the reason real world fixed exchange rate regimes usually have finite bands, instead of completely fixed exchange rates between realignments, is that exchange rate bands, counter to the textbook result, give central banks some monetary independence, even with free international capital mobility.
114 citations
Book•
30 Aug 1991TL;DR: In this paper, the objectives of monetary policy, 1924-33, and member bank borrowing and the Fed's policy strategy are discussed, as well as the effects of institutional change.
Abstract: List of figures List of tables Preface 1. Introduction 2. The objectives of monetary policy, 1924-33 3. Member bank borrowing and the Fed's policy strategy 4. Policy disagreements within the Federal reserve system: the effects of institutional change 5. Conclusion References Index.
99 citations