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Commitment to the Gold Standard - Broz

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McGill University
Political Science
POLI 354
Mark Brawley

The Political Economy of the Commitment to the Gold StandardBroz Abstractpolitical system instability and nondomocratic political institutions reduced the ability of nations to commit to the gold standard Also interest group pressure from the export sector during the deflationary era 18801987 made adherence to gold less likely 1 Introduction a Difference in adoption of gold standard based on core or periphery b Periphery should have had more incentive to adopt gold standard becuase they were developing c Political instability and adherence to gold democratic political systema and special interest groups are the factors that affected the adoption or not of the gold standard d Tested in 23 developed and developing countries and found sufficient evidence to prove the above 2 The Rise of the Gold Standard a Gold standard fix an official price for gold then convert domestic currency freely into gold at that price and impose no restrictions on the export or import of gold by private citizen b By 1900 western Europe and US were on the gold standard whereas Europe Latin America and Asia were not until laterprice and exchange rate stability were stronger in the core as a result 3 The Gold Standard as a Commitment Mechanism aGold standard worked to establish stable fiscal and monetary policies
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