Working Paper: CEPR ID: DP1390
Authors: Tamim Bayoumi; Michael D. Bordo
Abstract: We compare the resumption of convertibility into gold by the United States in 1879 and the United Kingdom in 1925 to ascertain the degree to which the outcomes reflect differences in strategies adopted by the authorities or in the external environment. It is concluded that external factors were the most important determinant of the very different outcomes of the two episodes.
Keywords: exchange rate pegs; gold standard
JEL Codes: F31; F33; F36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| External factors (F29) | Outcomes of U.S. and U.K. gold resumptions (F33) |
| U.S. economic prosperity (N12) | Stable gold resumption (E42) |
| U.K. economic turbulence (N14) | Failure to maintain gold peg (F31) |
| Monetary and exchange rate policies (U.K.) (F33) | Economic problems (late 1920s) (N14) |
| Contrasting external environments (P19) | Success or failure of gold standard strategies (F33) |
| Dollar convertibility into gold (F33) | Success of U.S. resumption (N22) |
| U.K. peg maintenance (F33) | Devaluation (F31) |