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Keynes and the dollar in 1933: the gold-buying program and exchange rate gyrations

  • Sebastian Edwards (a1)

In December 1933, John Maynard Keyes published an open letter to President Roosevelt, where he wrote: ‘The recent gyrations of the dollar have looked to me more like a gold standard on the booze than the ideal managed currency of my dreams.’ This was a criticism of the ‘gold-buying program’ launched in October 1933. In this article I use high-frequency data on the dollar–pound and dollar–franc exchange rates to investigate whether the gyrations of the dollar were unusually high in late 1933. My results show that although volatility was pronounced, it was not higher than during some other periods after 1921. Moreover, dollar volatility began to subside towards the end of the period alluded to by Keynes.

Corresponding author
S. Edwards, Anderson Graduate School of Management UCLA, 110 Westwood Plaza, Room C 508, Los Angeles, CA 90095-1481, USA; email:
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I thank Michael Poyker for his assistance. I have benefitted from conversations with Michael Bordo and Ed Leamer. I am particularly grateful to two referees and to Rui P. Esteves, editor of this journal, for very helpful comments that greatly helped improve the article.

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