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Working Paper
Export-Led Decay: The Trade Channel in the Gold Standard Era
Flexible exchange rates can facilitate price adjustments that buffer macroeconomic shocks. We test this hypothesis using adjustments to the gold standard during the Great Depression. Using prices at the goods level, we estimate exchange rate pass-through. Using novel monthly data on city-level economic activity, combined with employment composition and sectoral export data, we show that American exporting cities were significantly affected by changes in bilateral exchange rates. With those results we calibrate a general equilibrium model to obtain aggregate effects from cross-sectional ...
Discussion Paper
Crisis Chronicles – The California Gold Rush and the Gold Standard
On the crisp morning of January 24, 1848, James Marshall, a carpenter in the employ of John Sutter, traveled up the American River to inspect a lumber mill that Sutter had ordered constructed close to timber sources. Marshall arrived to find that overnight rains had washed away some of the tailrace the crew had been digging. But as Marshall examined the channel, something shiny caught his eye, and as he bent over to retrieve the object, his heart began to pound. Gold! Marshall and Sutter tried to contain the secret, but rumors soon spread to Monterey, San Francisco, and beyond--and the rush ...
Working Paper
Export-Led Decay: The Trade Channel in the Gold Standard Era
Flexible exchange rates can facilitate price adjustments that buffer macroeconomic shocks. We test this hypothesis using adjustments to the gold standard during the Great Depression. Using prices at the goods level, we estimate exchange rate pass-through and find gains in competitiveness after a depreciation. Using novel monthly data on city-level economic activity, combined with employment composition and sectoral export data, we show that American exporting cities were significantly affected by changes in bilateral exchange rates. They were negatively impacted when the UK abandoned the gold ...
Trade and Gold Reserves after the Demise of the Classical Gold Standard
After the early 1920s, the relationship between gold reserves and trade flows was tenuous at best as the international payments system experienced heightened uncertainty and significant change.
Journal Article
The Rise and Fall of the Quantity Theory in Nineteenth Century Britain: Implications for Early Fed Thinking
British monetary experience in the nineteenth century was extremely rich both in terms of the development of the quantity theory and in terms of the evolution of views of the role of the Bank of England in the international gold standard. One can ask, should or could the early Federal Reserve have learned from this experience? Especially during the Depression, why didn't the Federal Reserve understand its responsibility for the monetary contraction, deflation, and economic collapse it produced? Why didn't knowledge of the quantity theory, which developed in early nineteenth century Britain, ...
Trade and U.S. Gold Reserves during the Classical Gold Standard Era
During the period from around 1870 to the outbreak of World War I, changes in a nation’s gold reserves were closely linked to changes in its trade balances.
Working Paper
A Model of the Gold Standard
The gold standard emerged as the international monetary system by the end of the 19th century. We formally study its properties in a micro-founded model and find that the scarcity of the world gold stock not only results in a suboptimal output of goods that are purchased with money but also subjects the domestic economy of a country to external shocks. The creation of inside money in the form of private credit instruments adds to the money supply, usually resulting in a Pareto improvement, but opens the door to the international transmission of banking crises. These properties of the gold ...