Britain's Return to Gold and Impending Entry into the EMS: Expectations, Joining Conditions and Credibility

Marcus Miller and Alan Sutherland ()

No 268481, Economic Research Papers from University of Warwick - Department of Economics

Abstract: In this paper the surprising conclusion of Smith and Smith (1990) that the prospect of Britain's return to Gold in 1925 had the effect of weakening sterling is subjected to critical analysis. It is shown that this conclusion is reversed when the trend in the UK money stock prior to joining the Gold Standard is treated as endogenous; and when nonstationary solutions are considered. It is further suggested that a more realistic interpretation of events must involve the use of a model with price inertia. The final section of the paper considers the major difference between the UK's return to Gold and its impending entry into the EMS, namely the current lack of credibility attached to an exchange rate peg for sterling.

Keywords: Financial Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 42
Date: 1990-07-07
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: BRITAIN'S RETURN TO GOLD AND IMPENDING ENTRY INTO THE EMS: EXPECTATIONS, JOINING CONDITIONS AND CREDIBILITY (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:268481

DOI: 10.22004/ag.econ.268481

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