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The Gold Standard as a “Good Housekeeping Seal of Approval”

Published online by Cambridge University Press:  03 March 2009

Michael D. Bordo  and
Hugh Rockoff
Michael D. Bordo
Affiliation:
Professors of Economics at the Center for Monetary and Financial History at Rutgers University, P.O. Box 5055, New Brunswick, NJ 08903-5055
Hugh Rockoff
Affiliation:
Professors of Economics at the Center for Monetary and Financial History at Rutgers University, P.O. Box 5055, New Brunswick, NJ 08903-5055
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Abstract

In this article we argue that during the period from 1870 to 1914 adherence to the gold standard was a signal of financial rectitude, a “good housekeeping seal of approval”, that facilitated access by peripheral countries to capital from the core countries of western Europe. Examination of data from nine widely different capital-importing countries, using a model inspired by the Capital Asset Pricing Model, reveals that countries with poor records of adherence were charged considerably more than those with good records, enough to explain the determined effort to stay on gold made by a number of capital-importing countries.

Type
Papers Presented at the Fifty-Fifth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 56 , Issue 2 , June 1996 , pp. 389 - 428
Copyright
Copyright © The Economic History Association 1996

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