Working Paper: CEPR ID: DP6685
Authors: Nikolaus Wolf
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 the decision of exit from gold can be understood in terms of a trade-off between a quite limited set of factors commonly suggested in the theoretical literature on currency crises. A simple and parsimonious econometric framework that nests various hypotheses allows predicting the very month when a country will exit gold in the 1930s.
Keywords: Europe; Gold Exchange Standard; Interwar Period
JEL Codes: E42; E44; N14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Deflation increases (E31) | Likelihood of exiting the gold standard (F33) |
| Rising real wages (J39) | Likelihood of exiting the gold standard (F33) |
| Rising interest rates (E43) | Likelihood of exiting the gold standard (F33) |
| Political regime nature (P16) | Likelihood of exiting the gold standard (F33) |
| Central bank independence (E58) | Likelihood of exiting the gold standard (F33) |
| Economic integration with trading partners (F15) | Likelihood of exiting the gold standard (F33) |