Belling the cat: Eli F. Heckscher on the gold standard as a discipline device

Klas Fregert

No 2011:19, Working Papers from Lund University, Department of Economics

Abstract: Unlike Knut Wicksell, Eli Heckscher did not believe the time had arrived for “managed money” to replace the gold standard after World War I. The war had shown that only a gold standard could bind the central bank to a time-consistent policy with reasonable price stability. Heckscher likened the problem of reinstating the gold standard to “Belling the cat” in Aesop’s fable. When the international gold standard crumbled in the Great Depression, he supported the Swedish price stabilization regime as a temporary system. Heckscher was an early discoverer of the time-consistency problem in monetary policy and hence stressed the importance of the institutional framework of monetary policy.

Keywords: Heckscher; time-consistent policy; devaluation; deflation; gold standard (search for similar items in EconPapers)
JEL-codes: B22 E31 E42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2011-06-14
New Economics Papers: this item is included in nep-cba, nep-hpe and nep-mon
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Published as Fregert, Klas, 'Belling the cat: Eli F. Heckscher on the gold standard as a discipline device' in History of Political Economy, 2013, pages 39-59.

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