TY  - JOUR
AU  - Bordo,Michael D.
AU  - MacDonald,Ronald
TI  - The Inter-War Gold Exchange Standard: Credibility and Monetary Independence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8429
PY  - 2001
Y2  - August 2001
UR  - http://www.nber.org/papers/w8429
L1  - http://www.nber.org/papers/w8429.pdf
N1  - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu

Ronald MacDonald
Department of Economics
University of Glasgow
Glasgow, G12 8RT, UK
E-Mail: r.macdonald@socsi.gla.ac.uk
AB  - In this paper we analyze the operation of the inter-war gold exchange standard to see if the evident credibility of the system conferred on participating central banks the ability to pursue independent monetary policies.  To answer this question we econometrically analyze two key parity, or arbitrage, conditions, namely uncovered interest rate parity and a yield gap relationship. We find that there were both long- and short-run deviations from the arbitrage conditions. The use to which this policy independence was put is analyzed in the context of a multivariate system, which includes reaction function variables.
ER  -