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One of the most striking features of the decade-long Great Depression that started in 1929 was its global nature. Rather than being confined to the United States and its main trading partners, the downturn spread rapidly and forcefully to Europe, Latin America, and elsewhere.
What explains the Great Depression’s nearly universal scope? Recent scholarship shows that the international gold standard played a central role in starting, deepening, and spreading the 20th century’s greatest economic crisis.
In 1929, most market economies were once again on the gold standard. At the time, however, the United States, attempting to slow its overheated economy through monetary contraction, and France, having just ended an inflationary period and returned to gold, faced large financial inflows. Through the resulting balance of payments surpluses, both countries were absorbing the world’s monetary gold at a startling rate.
Other countries on the gold standard had no choice but to engage in domestic asset sales and raise interstates if they wished to conserve their dwindling gold stocks.
The resulting worldwide monetary contraction, combined with the shock waves from the October 1929 New York stock market crash, sent the world into deep recession.
A cascade of bank failures around the world only accelerated the global economy’s downward spiral. The gold standard again was a key culprit. Many countries desired to safeguard their gold reserves in order to be able to remain on the gold standard. This desire often discouraged them from providing troubled banks with the liquidity that might have allowed the banks to stay in business. After all, any cash provided to banks by their home governments would have increased potential private claims to the government’s precious gold holdings.
Perhaps the clearest evidence of the gold standard’s role is the contrasting behavior of output and the price level in countries that left the gold standard relatively early, such as Britain, and those that chose a different response to the trilemma and instead stubbornly hung on. Countries that abandoned the gold standard freed themselves to adopt more expansionary monetary policies that limited (or prevented) both domestic deflation and output contraction. The countries with the biggest deflations and output contractions over the years 1929–1935 included France, Switzerland, Belgium, the Netherlands, and Poland, all of which stayed on the gold standard until 1936.
返回《International Finance》慕课在线视频列表
-1.1 Foreign Exchange
--1.1PPT
--1.1Quiz
-1.2 Foreign Exchange Market
--1.2PPT
--1.2 Quiz
-1.3 Spot and Forward Transations
--1.3PPT
--1.3 Quiz
-1.4 Futures Transaction
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--1.4Quiz
-1.5 Foreign Currency Swaps
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--1.5Quiz
-1.6 Foreign Currency Options
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--1.6Quiz
-1.7 Exchange Arbitrage
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--1.7Quiz
-1.8 Hedging and Speculation
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--1.8Quiz
-Discussion 1
-Unit Test 1
--Unit Test 1
-2.1 What Determines Exchange Rates?
--2.1PPT
--2.1 Quiz
-2.2 Purchasing-power parity theory
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--2.2Quiz
-2.3 Asset market approach
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-2.4 Exchange rate overshooting
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-2.5 Forecasting Foreign Exchange Rate
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-2.6 International Comparisons of GDP PPP
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-Discussion 2
-Unit Test 2
--Unit Test 2
-3.1 Introduction
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-3.2 Double-Entry Accounting
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-3.3 Current Account
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-3.4 Capital and Financial Account
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-3.5 Recording of Transaction in the Balance of Payments
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-3.6 What is Meant by a Deficit or Surplus？
--3.6Video
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-3.7 Adjustment Mechanisms to the Balance of Payments
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-3.8 Elasticity Approach to the Balance of Payments
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--3.8.1 Quiz
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-3.9 Absorption Approach to Balance of Payments
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-Discussion 3
-Case3
--Case：SAFE Releases Data on Balance of Payments
-Unit Test 3
--Unit Test 3
-4.1 International Capital Flow Definition
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--4.1 Quiz
-4.2 Gains and losses from international lending
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-4.3 Theoretical benefits and problems
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-4.4 Capital flows Push vs Pull factors
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-Discussion 4
-Unit Test 4
--Unit Test 4
-5.1 International Lending to Developing Countries
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--5.1 Quiz
-5.2 Financial crisis -What can and does go wrong
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-5.3 Resolving financial crisis and reducing the frequency
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-5.4 Case study: the financial crisis of 2008
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-Discussion 5
-Unit Test 5
--Unit Test 5
-6.1 The Gold Standard 1
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-6.2 The Gold Standard 2
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-6.3 Bretton woods system
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-6.4 Jamaica system
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-6.5 The European experience in currency 1
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-6.6 The European experience in currency 2
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-6.7 International reserve1
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-6.8 International reserve2
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-Case 6
--Case : The International Gold Standard and the Great Depression
-Discussion 6
-Unit Test 6
--Unit Test 6
-7.1 Choosing an Exchange Rate System
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--7.1 Quiz
-7.2 Fixed Rate System
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-7.3 Floating Rate System
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-7.4 Managed Floating Rate
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-Case 7
-Discussion 7
-Unit Test 7
--Unit Test 7
-8.1 Economic Objectives and Instrument
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-8.2 IS-LM-BP Model
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-8.3 Effect of Monetary and Fiscal Policy
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-8.4 International Economic Policy Coordination
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--8.4 Quiz
-Discussion 8
-Case 8
--Case 8 : Macroeconomic Stability
-Unit Test 8
--Unit Test 8
-Final Exam
