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Latin American Experiments in Central Banking at the Onset of the Great Depression

Juan Flores Zendejas and Gianandrea Nodari

No unige:152742, Working Papers from University of Geneva, Paul Bairoch Institute of Economic History

Abstract: This chapter analyzes the role of central banks during the first years of the Great Depression. The literature has focused on central banks' loss of autonomy and on the implementation of innovative, countercyclical monetary policies which fostered economic recovery but also led to higher rates of inflation and exchange rate volatility. However, we show that these kinds of policies had been foreseen by foreign advisors before and during the crisis. Policymakers had been reluctant to implement them due to the fear of a loss of credibility for the gold standard regime. Furthermore, we show that in most cases this shift was short-lived and central banks could avert, to a large extent, the problem of fiscal dominance. Central banks became effective actors, channeling credit to the real economy and also supporting the emergence of state institutions that would promote the development of local industry.

Keywords: Central banking; Great Depression; Gold standard; Money doctors; Financial crises (search for similar items in EconPapers)
JEL-codes: F38 N0 N16 N26 (search for similar items in EconPapers)
Pages: 32 p.
Date: 2021
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac, nep-mon and nep-pay
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