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Democratic constraints and adherence to the classical gold standard

Bert S. Kramer and Petros Milionis

Explorations in Economic History, 2022, vol. 84, issue C

Abstract: We study how political institutions affected the decision of countries to adhere to the classical gold standard. Using a variety of econometric techniques and controlling for a wide range of relevant economic and political factors, we find that the probability of adherence to the gold standard before World War I was ceteris paribus lower for countries which were more democratic. This effect can be linked to how open the political process was to different segments of the population and the extent of political competition resulting from that. The effect was particularly relevant for peripheral countries and it influenced both the decision of countries to adopt the gold standard as well as the decision to suspend it.

Keywords: First globalization era; Gold standard; Democracy; Political institutions (search for similar items in EconPapers)
JEL-codes: E42 F33 F50 N40 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Democratic Constraints and Adherence to the Classical Gold Standard (2018) Downloads
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DOI: 10.1016/j.eeh.2021.101436

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