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Inequality and the Interwar Gold Standard

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  • Weinan Yan

    (Ursinus College)

Abstract

Many economic historians have argued that adherence to the gold standard was an important obstacle to recovery from the Great Depression. It is therefore important to understand the factors that affected a country’s determination to remain on gold. Here I explore a neglected but fundamental determinant: income inequality. I find that countries with higher income inequality at the start of the Depression remained on gold longer than countries with lower inequality (Inequality of wealth could also be an important factor, but since the wealth data were limited for the interwar period, this paper just focuses on inequality of income). The paper lays out the econometric evidence for this relationship and analyzes the underlying political economy that explains the relationship between inequality and adherence to the gold standard.

Suggested Citation

  • Weinan Yan, 2022. "Inequality and the Interwar Gold Standard," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 48(1), pages 90-121, January.
    • Handle: RePEc:pal:easeco:v:48:y:2022:i:1:d:10.1057_s41302-021-00196-6
    DOI: 10.1057/s41302-021-00196-6
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