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Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Can government gold be put to better use?: Qualitative and quantitative policies
Dale W. Henderson
John S. Irons
Stephen W. Salant
Sebastian Thomas
Abstract

Gold has both private uses (depletion uses and service uses) and government uses. It can be obtained from mines with high extraction costs (about $300 per ounce) or from above ground stocks with no extraction costs. Governments still store massive stocks of gold. Making government gold available for private uses through some combination of sales and loans raises welfare from private uses by removing two types of inefficiencies. For given private uses, there is a production inefficiency if costless government gold is withheld while costly gold is taken from mines. There are use inefficiencies if costless government gold is withheld from private users. We assess both qualitatively and quantitatively the gain in welfare and its distribution.


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Dale W. Henderson & John S. Irons & Stephen W. Salant & Sebastian Thomas, Can government gold be put to better use?: Qualitative and quantitative policies, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 582, 1997.
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Keywords: Gold ; International finance
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