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A Simple Model of the Gold Standard

Author

Listed:
  • Chappell, David
  • Dowd, Kevin

Abstract

This paper presents a model of the gold standard in which technology and preferences are modeled explicitly and account is taken of both the durability of gold and the exhaustibility of gold ore. The authors examine the steady state and its associated dynamics and show how the steady-state price level responds to changes in exogenous factors. Provided they have an interior solution with unmined gold in the steady state, this price level rises with technological progress in gold mining and falls with increases in real income and the discount rate. However, the steady-state price level behaves somewhat differently if the authors have a corner solution. Copyright 1997 by Ohio State University Press.

Suggested Citation

  • Chappell, David & Dowd, Kevin, 1997. "A Simple Model of the Gold Standard," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 94-105, February.
    • Handle: RePEc:mcb:jmoncb:v:29:y:1997:i:1:p:94-105
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    Citations

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    Cited by:

    1. Wei-Bin Zhang, 2015. "A Portfolio Equilibrium Model of Gold and Capital in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(12), pages 616-627, December.
    2. Beckmann, Joscha & Berger, Theo & Czudaj, Robert, 2015. "Does gold act as a hedge or a safe haven for stocks? A smooth transition approach," Economic Modelling, Elsevier, vol. 48(C), pages 16-24.
    3. Beckmann, Joscha & Czudaj, Robert, 2013. "Gold as an inflation hedge in a time-varying coefficient framework," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 208-222.
    4. Joscha Beckmann & Robert Czudaj, 2012. "Gold as an Infl ation Hedge in a Time-Varying Coeffi cient Framework," Ruhr Economic Papers 0362, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Faria, João Ricardo & McAdam, Peter, 2012. "A new perspective on the Gold Standard: Inflation as a population phenomenon," Journal of International Money and Finance, Elsevier, vol. 31(6), pages 1358-1370.
    6. Wei-Bin Zhang, 2016. "Exchange Values of Gold, Land, Physical Capital, and Human Capital in a Neoclassical Growth Model," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 265-286, September.
    7. Wang, Kuan-Min & Lee, Yuan-Ming & Thi, Thanh-Binh Nguyen, 2011. "Time and place where gold acts as an inflation hedge: An application of long-run and short-run threshold model," Economic Modelling, Elsevier, vol. 28(3), pages 806-819, May.
    8. Zhang, Wei-Bin, 2019. "Money and price dynamics under the gold standard in the neoclassical theory of growth," Revista Lecturas de Economía, Universidad de Antioquia, CIE, issue 90, pages 45-60, January.
    9. Wei-Bin Zhang, 2016. "Gold Value With Tradable And Non-Tradable Goods In A Multi- Country Growth Model With Free Trade," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 14(1), pages 35-52, May.
    10. Wang, Kuan-Min & Lee, Yuan-Ming, 2011. "The yen for gold," Resources Policy, Elsevier, vol. 36(1), pages 39-48, March.
    11. Michael D. Bordo & John Landon Lane & Angela Redish, 2004. "Good versus Bad Deflation: Lessons from the Gold Standard Era," NBER Working Papers 10329, National Bureau of Economic Research, Inc.
    12. repec:zbw:rwirep:0362 is not listed on IDEAS
    13. Mai, Nhat Chi, 2013. "Determinants of the gold price in Vietnam," OSF Preprints pv8dz, Center for Open Science.
    14. Michael Murach, 2019. "Global Determinants of the Gold Price: A Multivariate Cointegration Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(1), pages 198-214, February.
    15. Wei-Bin Zhang, 2019. "Endogenous Population In A Neoclassical Growth Model With Wealth And Time Values," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 4(5), pages 47-63, May.
    16. , Le Thi Son & Chi, Trinh Thuy & Anh, Nguyen Thi Nguyet, 2013. "Determinants of the gold price in Vietnam," OSF Preprints 85dqp, Center for Open Science.
    17. repec:zbw:rwirep:0502 is not listed on IDEAS
    18. Joscha Beckmann & Robert Czudaj, 2013. "Oil and gold price dynamics in a multivariate cointegration framework," International Economics and Economic Policy, Springer, vol. 10(3), pages 453-468, September.
    19. Zhang Wei-Bin, 2016. "Gold And Land Prices With Capital Accumulation In An Economy With Industrial And Agricultural Sectors," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 16-29, April.
    20. Narinder Pal Singh & Navneet Joshi, 2019. "Investigating Gold Investment as an Inflationary Hedge," Business Perspectives and Research, , vol. 7(1), pages 30-41, January.
    21. Wei-Bin Zhang, 2018. "Business Cycles in a Three-sector Growth Model with Portfolio Equilibrium between Land, Gold and Capital," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(2), pages 171-196, May.
    22. Joscha Beckmann & Theo Berger & Robert Czudaj, 2014. "Does Gold Act as a Hedge or a Safe Haven for Stocks? A Smooth Transition Approach," Ruhr Economic Papers 0502, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    23. Kuan-Min Wang & Thanh-Binh Nguyen Thi & Yuan-Ming Lee, 2021. "Is gold a safe haven for the dynamic risk of foreign exchange?," Future Business Journal, Springer, vol. 7(1), pages 1-17, December.
    24. P.K. Mishra, 2014. "Gold Price and Capital Market Movement in India: The Toda–Yamamoto Approach," Global Business Review, International Management Institute, vol. 15(1), pages 37-45, March.
    25. Charbel Bassil & Hassan Hamadi & Patrick Mardini, 2019. "Gold and oil prices: stable or unstable long-run relationship," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(1), pages 57-72, January.

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