A model of the classical gold standard with depletion

Bordo, Michael D.; Ellson, Richard W.

doi:10.1016/0304-3932(85)90010-8

Cited by 23 publications

(13 citation statements)

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“…SeeIMF (2002) andBergman, Bordo and Jonung (1998).6 For example, models inBordo and Ellson (1985) andDowd and Chappell (1997) allow the quantity of gold mined to respond endogenously to the price level, through investment in refining technologies and exploration. See also,Barro (1979) andRockoff (1984).…”

mentioning

confidence: 99%

Good versus Bad Deflation: Lessons from the Gold Standard Era

Bordo¹,

Lane²,

Redish³

2004

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Deflation has had a bad rap, largely based on the experience of the 1930's when deflation was synonymous with depression. Recent experience with declining prices in Japan and China together with the concern over deflation in Europe and the United States has led to renewed attention to the topic of deflation. In this paper we focus our attention on the deflation experience of the United States, the United Kingdom, and Germany in the late nineteenth century during a period characterized by low deflation, rapid productivity growth, positive output growth, and where many nations had a credible nominal anchor based on gold: circumstances which have resonance with the world of today. We identify aggregate supply, aggregate demand, and money supply shocks using a structural panel vector autoregression. We then use historical decompositions to investigate the impact that these structural shocks had on output and prices. Our findings are that the deflation of the late nineteenth century reflected both positive aggregate supply shocks and negative money supply shocks. However, the negative money supply shocks had little effect on output. This we posit is because the aggregate supply curve was very steep in the short run during this period. This contrasts greatly with the deflation experience during the Great Depression. Thus our empirical evidence suggests that deflation in the nineteenth century was primarily good.

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mentioning

confidence: 99%

Good versus Bad Deflation: Lessons from the Gold Standard Era

Bordo¹,

Lane²,

Redish³

2004

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“…Unlike contemporary models, Ricardo's analysis does not grant this monetary regime the merit of maintaining price stability (Barro 1979, Bordo-Ellson 1985, Fremling 1986). The virtue of keeping the price of the standard of money fixed was not, to Ricardo's way of thinking, to ensure price stability, but to allow the distinction between changes in the value of money and changes in money prices.…”

Section: Revue Economiquementioning

confidence: 98%

Ricardo's Theory of Money Matters

Marcuzzo¹,

Rosselli²

1994

Revue économique

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Sciences Po University Press is collaborating with JSTOR to digitize, preserve and extend access to Revue économique.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.Dans cet expos6 on analyse trois reproches adress6s commun6ment a la theorie monetaire de Ricardo : la monnaie-marchandise, la neutralit6 de la monnaie et la conception d'6quilibre a long terme. Le premier, que I'identification de la monnaie avec I'or emp6che Ricardo de saisir le sens du papier-monnaie et, par consequent de comprendre pleinement ses propri6t6s. Le deuxieme, que Ricardo est le champion de la th6orie quantitative de la monnaie et qu'il refuse de voir les effets reels des variations dans les variables nominales. Le troisieme, que Ricardo porte une attention exclusive aux p,hnomenes permanents au d6triment de I'analyse des phenomenes a court terme. Notre analyse affronte ces reproches et propose une interpr6tation alternative de la theorie mon6taire de Ricardo. MISUNDERSTANDINGS According to Hicks [1967], classical monetary theory has two main strands, one represented by Ricardo and the Currency School, who believed in relying at all costs (including deflation and unemployment) on automatic regulation of the quantity of money, the other stream by Thornton and Tooke, who favoured a permissive monetary policy and were prepared to accept a little monetary instability as the price of sustaining the level of economic activity and insulating the domestic economy from fluctuations in the balance of payments.Clearly this interpretation reflects the general acceptance of the Keynesian approach to monetary theory in those years, when Ricardo "was that able but wrong-headed man" who "shunted the car" of monetary theory on to a wrong line. On the contrary, Thomton is the economist who understood that "money matters": a monetary economy is governed by uncertainty; in monetary affairs discretion is preferable to rules, since the economy is hardly ever in full equilibrium and the equilibrating forces of market mechanisms are slow or ineffective .

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“…Vgl. daneben Barsky und Summers (1988); Bordo und Ellson (1985); Flood und Garber (19846); Garber und Grilli (1986).…”

Section: 1 üBersichtunclassified

Zahlungsbilanzkrisen bei begrenzter Devisenmarkteffizienz

Bruderhausen¹

2004

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An erster Stelle danke ich Prof. Dr. Franco Reither für die sorgfältige Betreuung im Verlauf des Entstehens dieser Arbeit. Verpflichtet bin ich ihm auch für die sorgfältige akademische Unterweisung, die er mir als seinem Mitarbeiter zukommen ließ. Danken möchte ich ebenfalls Prof. Dr. Alexander Karmann für die Anfertigung des Zweitgutachtens. Auch seine Anmerkungen waren mir eine wertvolle Hilfe. Dank gebührt darüber hinaus meinen Eltern. Ohne ihren Rückhalt hätte ich die vorliegende Arbeit weder beginnen noch abschließen können.

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A model of the classical gold standard with depletion

Cited by 23 publications

References 10 publications

Good versus Bad Deflation: Lessons from the Gold Standard Era

Good versus Bad Deflation: Lessons from the Gold Standard Era

Ricardo's Theory of Money Matters

Zahlungsbilanzkrisen bei begrenzter Devisenmarkteffizienz

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