August, 2015

Stability and the Gold Standard

  • Thomas L. Hogan

    Fellow in Public Finance, Baker Institute Center for Public Finance, Rice University
  • Daniel J. Smith

    Associate Professor of Economics, Troy University
  • Robin Aguiar-Hicks

Contact us
To speak with a scholar or learn more on this topic, visit our contact page.

Many studies find that economic stability on the gold standard was as good as or better than it has been under the central banking. Yet despite this evidence, most economists believe a gold standard creates undesirable economic outcomes including economic volatility, price instability, financial panics, the transference of bad policies via the exchange rate, and even speculation-induced collapse. As chairman of the Federal Reserve, Ben Bernanke argued these supposed weaknesses of the gold standard relegated it an inferior monetary system and justified the establishment of the Fed. We examine the criticisms of the gold standard made by Bernanke and other economists and find that they are inconsistent with most historical evidence from international studies and from the pre-Fed gold standard in the United States.

Continue reading at SSRN.