Did Gold Remain Relevant in the Post-1971 International Monetary System?

Jean-Guy Loranger

A chapter in Contradictions: Finance, Greed, and Labor Unequally Paid, 2013, pp 49-88 from Emerald Group Publishing Limited

Abstract: The central hypothesis to be tested is the relevance of gold in the determination of the value of the US dollar as an international reserve currency after 1971. In the first section, the market value of the US dollar is analysed by looking at new forms of value (financial derivative products), the dollar as a safe haven, the choice of a standard of value and the role of special drawing rights in reforming the international monetary system. Based on dimensional analysis, the second section analyses the definition and meaning of a numéraire for international currency and the justification for a variable standard of value based on a commodity (gold). Then follows the theoretical foundation for the empirical and econometric analysis used later. The third section is devoted to the specification of an econometric model and a graphical analysis of the data. It is clear that an inverse relation exists between the value of the US dollar and the price of gold. The fourth section shows the estimations of the different specifications of the model including linear regression and cointegration analysis. The most important econometric result is that the null hypothesis is rejected in favour of a significant link between the price of gold and the value of the US dollar. There is also a positive relationship between gold price and inflation. An inverse statistically significant relation between gold price and monetary policy is shown by applying a dynamic model of cointegration with lags.

Keywords: Money; value; benchmark; gold; dollar; cointegration (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
https://www.emerald.com/insight/content/doi/10.110 ... 7230(2013)0000028004
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:rpeczz:s0161-7230(2013)0000028004

DOI: 10.1108/S0161-7230(2013)0000028004

Access Statistics for this chapter

More chapters in Research in Political Economy from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().