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To Raise the Golden Anchor? Financial Crises and Uncertainty During the Great Depression

  • J. Peter Ferderer (a1) and David A. Zalewski (a2)

This study examines the interplay between financial crises, uncertainty, and economic growth during the interwar period. Comparing the experiences of ten countries, we provide evidence that reductions in the credibility of a country's commitment to the gold standard generated capital flight and higher interest rate volatility. This volatility, in turn, was inversely correlated with economic growth. These results suggest that financial crises helped propagate the Great Depression, in part, by increasing uncertainty.

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