IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/348.html
   My bibliography  Save this paper

International Monetary Stability Between the Wars: Structural Flaws or Misguided Policies?

Author

Listed:
  • Eichengreen, Barry

Abstract

This paper examines the international monetary system between the Wars. It confirms the generality of several widely held interpretations of recent experience with floating exchange rates. There is a positive association between nominal exchange rate flexibility and nominal exchange rate variability, and between nominal and real exchange rate variability. But policies which reduce nominal exchange rate variability do not guarantee a proportionate reduction in nominal exchange rate risk or in real exchange rate variability and unpredictability without a credible commitment to a stable intervention rule.The paper then considers four potential explanations for the collapse of the fixed rate regime of 1926-3l: failure to play by the `rules of the game'; inadequate international economic leadership by the United States; inadequate cooperation among the leading Gold Standard countries; and structural features of a system in which reserves comprised both gold and foreign exchange. It concludes by assessing the role of the international monetary system in the Great Depression.

Suggested Citation

  • Eichengreen, Barry, 1989. "International Monetary Stability Between the Wars: Structural Flaws or Misguided Policies?," CEPR Discussion Papers 348, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:348
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=348
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marianne Baxter & Alan C. Stockman, 1988. "Business Cycles and the Exchange Rate System: Some International Evidence," NBER Working Papers 2689, National Bureau of Economic Research, Inc.
    2. Nouriel Roubini, 1988. "Offset and Sterilization Under Fixed Exchange Rates With An Optimizing Central Bank," NBER Working Papers 2777, National Bureau of Economic Research, Inc.
    3. Eichengreen, Barry, 1988. "Real exchange rate behavior under alternative international monetary regimes : Interwar evidence," European Economic Review, Elsevier, vol. 32(2-3), pages 363-371, March.
    4. Rogoff, Kenneth, 1985. "Can exchange rate predictability be achieved without monetary convergence? : Evidence from the EMS," European Economic Review, Elsevier, vol. 28(1-2), pages 93-115.
    5. Eichengreen, Barry, 1987. "Real Exchange Rate Behavior Under Alternative International Monetary Regimes: Interwar Evidence," Department of Economics, Working Paper Series qt0nh766xh, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Barry Eichengreen, 1988. "Did International Economic Forces Cause The Great Depression?," Contemporary Economic Policy, Western Economic Association International, vol. 6(2), pages 90-114, April.
    7. Eichengreen, Barry, 1987. "Did International Economic Forces Cause the Great Depression?," Department of Economics, Working Paper Series qt27p2v5zm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    8. Artis, M. J., 1987. "The European monetary system: An evaluation," Journal of Policy Modeling, Elsevier, vol. 9(1), pages 175-198.
    9. Jeffrey Sachs & Charles Wyplosz, 1984. "Real Exchange Rate Effects of Fiscal Policy," NBER Working Papers 1255, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eichengreen, Barry, 1989. "The Comparative Performance of Fixed and Flexible Exchange Rate Regimes: Interwar Evidence," CEPR Discussion Papers 349, C.E.P.R. Discussion Papers.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eichengreen, Barry, 1989. "The Comparative Performance of Fixed and Flexible Exchange Rate Regimes: Interwar Evidence," CEPR Discussion Papers 349, C.E.P.R. Discussion Papers.
    2. I Paya & D Peel, 2005. "A new analysis of the determinants of the real dollar-sterling exchange rate: 1871-1994," Working Papers 565953, Lancaster University Management School, Economics Department.
    3. Barry Eichengreen, 1987. "Trade deficits in the long run," Proceedings, Federal Reserve Bank of St. Louis, pages 239-285.
    4. JamesR. Lothian & MarkP. Taylor, 2008. "Real Exchange Rates Over the Past Two Centuries: How Important is the Harrod-Balassa-Samuelson Effect?," Economic Journal, Royal Economic Society, vol. 118(532), pages 1742-1763, October.
    5. Soubarna Pal, 2011. "Productivity Differential and Bilateral Real Exchange Rate between India and US," Journal of Quantitative Economics, The Indian Econometric Society, vol. 9(1), pages 146-155.
    6. Rudiger Dornbusch, 1988. "Real Exchange Rates and Macroeconomics: A Selective Survey," NBER Working Papers 2775, National Bureau of Economic Research, Inc.
    7. Jorge Carrera & Guillermo Vuletin, 2003. "The Effects of Exchange Rate Regimes on Real Exchange Rate Volatility. A Dynamic Panel Data Approach," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] c67, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. John H. Rogers, 1995. "Real shocks and real exchange rates in really long-term data," International Finance Discussion Papers 493, Board of Governors of the Federal Reserve System (U.S.).
    9. Ralf Ahrens & Stefan Reitz, 2000. "Chartist Prediction in the Foreign Exchange Market. Evidence from the Daily Dollar/DM Exchange Rate," Econometric Society World Congress 2000 Contributed Papers 1683, Econometric Society.
    10. Richard Higgott & J J Woo & Tim Legrand, 2021. "The demand for IPEand public policy in the governance of global policy design [The emerging regional architecture of world politics]," Policy and Society, Darryl S. Jarvis and M. Ramesh, vol. 40(4), pages 449-466.
    11. Jeffrey A. Frankel & Andrew K. Rose, 1994. "A Survey of Empirical Research on Nominal Exchange Rates," NBER Working Papers 4865, National Bureau of Economic Research, Inc.
    12. Alexakis, Panayotis & Apergis, Nicholas & Xanthakis, Emmanuel, 1997. "Integration of international capital markets: further evidence from EMS and non-EMS membership," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 7(3), pages 277-287, October.
    13. Weber, A.A., 1988. "The credibility of monetary policies, policymakers' reputation and the EMS-hypothesis : Empirical evidence from 13 countries," Discussion Paper 1988-3, Tilburg University, Center for Economic Research.
    14. Frankel, Jeffrey A. & Rose, Andrew K., 1996. "Economic Structure and the Decision to Adopt a Common Currency," Center for International and Development Economics Research (CIDER) Working Papers 233436, University of California-Berkeley, Department of Economics.
    15. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
    16. Weber, A.A., 1988. "The credibility of monetary policies, policymakers' reputation and the EMS-hypothesis : Empirical evidence from 13 countries," Other publications TiSEM 7d95e7bb-efff-41a6-8ea2-b, Tilburg University, School of Economics and Management.
    17. repec:lan:wpaper:2400 is not listed on IDEAS
    18. Ahrens, Ralf & Reitz, Stefan, 2003. "Heterogeneous Expectations in the Foreign Exchange Market Evidence from the Daily Dollar/DM Exchange Rate," CFS Working Paper Series 2003/11, Center for Financial Studies (CFS).
    19. Gabriel P. Mathy, 2014. "Uncertainty Shocks and Equity Return Jumps and Volatility During the Great Depression," Working Papers 2014-02, American University, Department of Economics.
    20. Terry Boulter & Celeste Ping Fern Tan, 2000. "The Short Run Impact of Scheduled Macroeconomic Announcements on the Australian Dollar during 1998," School of Economics and Finance Discussion Papers and Working Papers Series 082, School of Economics and Finance, Queensland University of Technology.
    21. Kenneth A. Froot & Kenneth Rogoff, 1991. "The EMS, the EMU, and the Transition to a Common Currency," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 269-328, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.