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

Published online by Cambridge University Press:  03 March 2009

J. Peter Ferderer  and
David A. Zalewski
J. Peter Ferderer
Affiliation:
Associate Professor, Department ofEconomics, Macalester College, 1600 Grand Avenue, Saint Paul MN 55105. E-mail: ferderer@macalester.edu.
David A. Zalewski
Affiliation:
Associate Professor of Finance, Koffler Hall, Providence College, River Avenue, Providence RI 02198. E-mail: zalewski@providence.edu.
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Abstract

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.

Type
Articles
Information
The Journal of Economic History , Volume 59 , Issue 3 , September 1999 , pp. 624 - 658
Copyright
Copyright © The Economic History Association 1999

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