The Worldwide Change in the Behavior of Interest Rates and Prices in 1914
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NBER Working Paper No. 2344 (Also Reprint No. r1115)*
Issued in February 1989
NBER Program(s): ME
EFG
This paper evaluates the role of the destruction of the gold standard and the founding of the Federal Reserve, both of which occurred in 1914, in contributing to observed changes in the behavior of interest rates and prices after 1914. The paper presents a model of policy coordination in which the introduction of the Fed stabilizes interest rates, even if the gold standard remains intact, and it offers empirical evidence that the dismantling of the gold standard did not play a crucial role in precipitating the changes in interest rate behavior.
*Published:
European Economic Review, Vol. 32, (1988): 1123-1147.
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