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The Gold Standard and the Great Depression: a Dynamic General Equilibrium Model

Author

Listed:
  • Luca Pensieroso

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Romain Restout

    (Université de Lorraine, Université de Strasbourg, CNRS, BETA)

Abstract
Was the Gold Standard a major determinant of the onset and the protracted character of the the Great Depression of the 1930s in the United States and Worldwide? In this paper, we model the ‘Gold-Standard hypothesis’ in a dynamic general equilibrium framework. We show that encompassing the international and monetary dimensions of the Great Depression is important to understand what happened in the 1930s, especially outside the United States. Contrary to what is often maintained in the literature, our results suggest that the vague of successive nominal exchange rate devaluations coupled with the monetary policy implemented in the United States did not act as a relief. On the contrary, they made the Depression worse.

Suggested Citation

  • Luca Pensieroso & Romain Restout, 2018. "The Gold Standard and the Great Depression: a Dynamic General Equilibrium Model," LIDAM Discussion Papers IRES 2018016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2018016
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    File URL: https://sites.uclouvain.be/econ/DP/IRES/2018016.pdf
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    References listed on IDEAS

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    Cited by:

    1. Karau, Sören, 2020. "Buried in the vaults of central banks: Monetary gold hoarding and the slide into the Great Depression," Discussion Papers 63/2020, Deutsche Bundesbank.

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    More about this item

    Keywords

    Gold Standard; Great Depression; Dynamic General Equilibrium;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods

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