3 ms·
Coming off the gold standard was probably the correct monetary policy at the time. But one cannot correlate the ending of deflation with a 'recovery', especiall
by leg100 14y ago
Coming off the gold standard was probably the correct monetary policy at the time. But one cannot correlate the ending of deflation with a 'recovery', especially one that is sustainable and not at the expense of others (i.e. those who left the gold standard later; if a country devalues its currency it would see an 'immediate recovery', but really it's a case of taking from one hand and giving to another).
Furthermore, it may be that looser monetary policy went hand in hand with war production in leading a recovery. Convertibility was often suspended in previous wars to help finance them.
There's no consensus on this matter.
- trevelyan 14y agoRespectfully, time series analysis involves the use of statistical techniques which have been designed precisely to tease out these kinds of correlations. So what you claim to be impossible is not only statistically possible, but in fact constitutes mainstream econometrics. There is a clear consensus that fiscal stimulus in war spending played a key role in pulling the United States back to full employment. There is also a clear consensus that the gold standard served as a transmission mechanism for deflationary pressures internationally. If you do not believe this, I'd challenge you to find even a single NBER paper that argues otherwise.