Keynes and the Dollar in 1933

Sebastian Edwards

NBER Working Paper No. 23141
Issued in February 2017
NBER Program(s):Development of the American Economy, International Finance and Macroeconomics

On December 1933, John Maynard Keyes published an open letter to President Roosevelt, where he wrote: “The recent gyrations of the dollar have looked to me more like a gold standard on the booze than the ideal managed currency of my dreams.” In this paper I use high frequency data to investigate whether the gyrations of the dollar were unusually high throughout this period. My results show that although volatility was pronounced, it was not higher than during October 1931- July 1933. I analyze Keynes writings on the international monetary system in an effort to understand what he meant in his letter. I compare Keynes’s “The means to prosperity” with James P. Warburg’s plan for a “modified international standard.”

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Document Object Identifier (DOI): 10.3386/w23141

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