International Monetary Instability Between the Wars: Structural Flaws or Misguided Policies?
This paper reaueses the history of the international monetary system between the wars. It confirms
the generality of several widely held interpretationsl of recent experience with floating exchange rates.
There is a positive association between nominal exchange rate variability and real exchange
rate variability. But policies of intervention which reduce nominal ezchange rate variability do not
guarantee a proportionate reduction in nominal exchange rate risk or in real exchange rate variability
and unpredictability. A credible commitment to a stable intervention rule is needed to deliver these
The paper then goes on to consider four potential explanations for the collapse of the fixed rate regime
that prevailed from 1926 through 1931: (1) failure to play by the "rules of the game", (2) inadequate
international economic leadership by the United States, (3) inadequate cooperation among the leading
gold standard countries, and (4) structural features of a system in which reserves were comprised of
both gold and foreign ezchange. It coocludes by aseessing the role of the internationall monetary system
in the Great Depression.
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.