The Gold Standard as a “Good Housekeeping Seal of Approval”

Abstract

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Exchange rate regimes and prices: The cases of Italy, Spain and the United Kingdom (1874–1998)

“…Furthermore, with UK prices representing the orthodoxy of monetary control in central gold standard countries, their leadership over Mediterranean prices illustrates how these peripheral countries, although formally outside the metallic standard (Italy intermittently, Spain permanently), did not remain monetarily isolated. In other words, the finding of cointegration supports the idea of Bordo and Rockoff (1996) about the de facto shadowing of the gold stability rules by the Italian and Spanish authorities.…”

“…It could be said that Spain, just like Italy, despite not adhering or adhering only intermittently to the gold standard, shadowed its stability rules, which were perfectly represented by the UK trajectory (Bordo and Rockoff, 1996) 13 . During most of this period, the UK personified monetary orthodoxy, so the willingness of the Mediterranean countries to follow this orthodoxy could explain the domination of UK prices over the system.…”

Book Reviews

“…They convincingly show that the good housekeeping seal of approval hypothesis put forth by Bordo and Rockoff (1996) does not come out with a robust effect once the appropriate economic and political control variables are used. At best, they argue, it explains a tiny fraction of the convergence of interest rates observed during the period of study.…”

Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law

“…The desire to maintain a good reputation raises the costs for governments that might be tempted to violate the conditions of the international agreement. 6 Just as members of the classical gold standard received a "Good Housekeeping Seal of Approval" from creditors through their adherence to the system, commitment to and compliance with the IMF's legal directives in the current era of financial globalization should provide a visible signal to markets that borrowing governments are creditworthy (Bordo and Rockoff 1996;Obstfeld and Taylor 2003a, b).…”