The Suspension of the Gold Standard as Sustainable Monetary Policy

Elisa Newby

CDMA Conference Paper Series from Centre for Dynamic Macroeconomic Analysis

Abstract: This paper models the gold standard as a state contingent commitment technology that is only feasible during peace. Monetary policy during war, when the gold convertibility rule suspended, can still be credible, if the policy maker’s plan is to resume the gold standard in the future. The DGE model developed in this paper suggests that the resumption of the gold standard was a sustainable plan, which replaced the gold standard as a commitment technology and made monetary policy time consistent. Trigger strategies support the equilibrium: private agents retaliate if a policy maker defaults its plan to resume the gold standard.

Keywords: Time Consistency; Monetary Policy; Monetary Regimes. (search for similar items in EconPapers)
JEL-codes: C61 E31 E4 E5 N13 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-cba, nep-dge, nep-his and nep-mon
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The suspension of the gold standard as sustainable monetary policy (2012)
Working Paper: The Suspension of the Gold Standard as Sustainable Monetary Policy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:san:cdmacp:0907

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