Working Paper: NBER ID: w0544
Authors: Robert P. Flood; Peter M. Garber
Abstract: The paper is a study of the price level and relative price effects of a policy to monetize gold and fix its price at a given future time and at the then prevailing nominal price. Price movements are analyzed both during the transition to the gold standard and during the post-monetization period. The paper also explores the adjustments to fiat money which are necessary to ensure that this type of gold monetization is non-inflationary. Finally, some conditions which produce a run on the government's gold stock leading to the collapse of the gold standard and the timing of such a run are examined.
Keywords: gold monetization; inflation; gold standard
JEL Codes: E31; E42; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| announcement of future gold monetization (E42) | inflationary expectations (E31) |
| announcement of future gold monetization (E42) | relative price of gold jumps upward (P22) |
| specific monetary policies (E63) | non-inflationary monetization (E59) |
| monetary policies adherence (E60) | stability of the gold standard (F33) |
| deviations from disciplined monetary policy (E60) | crises (H12) |