Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

Stability without a pact? Lessons from the European Gold Standard, 1880-1913

Abstract : The gold standard was a system of fixed exchange rates that offered little opportunity for carrying out monetary policies, short of suspending gold convertibility. Trade integration and capital mobility were very high. It is worthwhile asking whether there are useful lessons to draw for EMU from European experience during that period. One clear lesson is that debts matter. Another basic finding is that the stability of the European gold standard depended on the underlying price trend. Deflation prior to 1895 resulted in rising public debt burdens, which forced some countries to leave the system. Once gold was discovered and deflation gave way to inflation, real interest service fell, debts grew more slowly and a high degree of convergence allowed most countries to return to gold. For EMU, this result implies that stability will hinge on the ECB's policy not being too restrictive. Other lessons concern the fragility of institutions in the face of deep public finance difficulties, the risks for the single market of leaving out countries that have not fully converged, and the existence of a virtuous cycle including low real interest rates, fast growth and debt deccumulation.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

Cited literature [65 references]  Display  Hide  Download
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Tuesday, July 22, 2014 - 11:30:08 PM
Last modification on : Thursday, May 26, 2022 - 3:56:19 AM
Long-term archiving on: : Tuesday, November 25, 2014 - 11:46:09 AM


Files produced by the author(s)


  • HAL Id : hal-01037858, version 1
  • SCIENCESPO : 2441/645


Frédéric Zumer, Jacques Le Cacheux, Marc Flandreau. Stability without a pact? Lessons from the European Gold Standard, 1880-1913. 1998. ⟨hal-01037858⟩



Record views


Files downloads