A new perspective on the Gold Standard: Inflation as a population phenomenon

Joao Ricardo Faria and Peter McAdam ()
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Joao Ricardo Faria: University of Texas at El Paso

No 412, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: The purpose of this paper is to contribute a new model of the Gold Standard, focusing on the interaction between resource scarcity and demographics. In a dynamic micro-founded model we find that: i) prices and equilibrium gold holdings increase with population (a scale effect), but decrease with the population growth rate; ii) that the Gold Standard implies deflation unless extraction resources outstrip population growth; iii) there is no optimal quantity of money. The predictions of the model are examined using a structural VAR. Our results also shed light on debates about the viability of a return to the Gold Standard, and, more generally, on the interaction between policy variables and scarce resources.

Keywords: Gold Standard; Cagan-Keynes; Labor; Extraction; Scarcity; Inflation; Deflation; Population Dynamics (search for similar items in EconPapers)
JEL-codes: E31 E41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: A new perspective on the Gold Standard: Inflation as a population phenomenon (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0412

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