Gold Monetization and Gold Discipline

39 Pages Posted: 21 Apr 2005 Last revised: 29 Dec 2022

See all articles by Robert P. Flood

Robert P. Flood

International Monetary Fund (IMF) - Research Department; CENTRUM Business School; National Bureau of Economic Research (NBER)

Peter M. Garber

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1980

Abstract

The paper is a study of the price level and relative price effects of a policy to monetize gold and fix its price at a given future time and at the then prevailing nominal price. Price movements are analyzed both during the transition to the gold standard and during the post-monetization period. The paper also explores the adjustments to fiat money which are necessary to ensure that this type of gold monetization is non-inflationary. Finally, some conditions which produce a run on the government's gold stock leading to the collapse of the gold standard and the timing of such a run are examined.

Suggested Citation

Flood, Robert P. and Garber, Peter M., Gold Monetization and Gold Discipline (September 1980). NBER Working Paper No. w0544, Available at SSRN: https://ssrn.com/abstract=264378

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