DP6685 Scylla and Charybdis. Explaining Europe?s Exit from Gold, January 1928- December 1936

Author(s):	Nikolaus Wolf
Publication Date:	February 2008
Keyword(s):	Europe, Gold-Exchange Standard, Interwar Period
JEL(s):	E42, E44, N14
Programme Areas:	International Macroeconomics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=6685

The paper examines the timing of exit from the interwar gold-exchange standard for a panel of European countries, based on monthly data over the period January 1928 - December 1936. I show that the decision of exit from gold can be understood in terms of a trade-off between a quite limited set of factors commonly suggested in the theoretical literature on currency crises. A simple and parsimonious econometric framework that nests various hypotheses allows predicting the very month when a country will exit gold in the 1930s.