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Jorge Braga de Macedo as an Economic Historian: The Transition of the Portuguese Economy from the Authoritarian to the Democratic Period (1960–1979) Read chapter Read first chapter

2021 | OriginalPaper | Chapter

The Gold Standard and the Euro: Conjoined Twins or Distant Relations?

Author : Barry Eichengreen

Published in: Economic Globalization and Governance

Publisher: Springer International Publishing

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Abstract

I provide a structured comparison of the nineteenth-century classical gold standard and the Euro, basing my analysis heavily on recent research. Both similarities and differences are evident in the historical record. Both regimes were vaunted as engines of convergence, but in both cases convergence was incomplete. Both were seen as delivering fiscal discipline, but in both cases such discipline was erratic. But whereas the gold standard was always a contingent monetary regime, there is nothing contingent about Euro-area membership. Finally, the gold standard operated in a simpler political setting, one in which mass participation in electoral politics was the exception to the rule.

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previous chapter US Inflation and the Imbalances of the Bretton Woods System, 1965–1973
next chapter A Macro-stabilization Function for the Euro Area
Footnotes
1
See Braga de Macedo (1996) and also Braga de Macedo et al. (1996) in this same volume.
 
2
As finance minister, Braga de Macedo had brought Portugal into the EMS in the spring of 1992.
 
3
The gold import and export points, determined by transactions costs of shipping gold between national markets, were on the order of ± 1 percent. Some central banks were able to maintain wider bands by imposing additional costs (paying out only clipped or worn coin) or redeeming currency notes only at remote offices. See Bloomfield (1959) and Officer (2007).
 
4
Braga de Macedo (1996), p 242.
 
5
The Braga de Macedo piece cited above was in fact prepared for a conference held in Arrábida in 1994.
 
6
This discussion of nominal and real, but not also political, convergence draws on Eichengreen (2019).
 
7
Along with budget deficits and debt ratios.
 
8
My focus here is on Western Europe, the transition economies of Eastern Europe being a somewhat special case.
 
9
“Colonial” status is used here as shorthand for membership in the British Commonwealth and Empire.
 
10
If one considers instead all 19 members of the present-day Euro area, there was strong convergence up to 2008, reflecting catch-up growth in the Central European and Baltic members and also strong if unsustainable growth in Southern Europe, fueled by capital inflows, which then halted in 2008.
 
11
Also, in Belgium whose inclusion on this list may surprise the reader (it certainly surprised this author). Belgium’s decline reflects a falling score on “order and security” due mainly, it would appear, to a low rating for the prevalence of civil conflict. In contrast, the rule of law rating has been improving in Portugal.
 
12
Even there, there have been occasional violations, as in Germany in 2003.
 
13
This being the central point of Cairncross (1953).
 
14
See also Sect. 2 above.
 
15
This was more prominently the case of British overseas lending as compared to lending by French and German investors (see Feis et al. 1931 and Fishlow 1985).
 
16
The corresponding expansion was less in Greece and Portugal.
 
17
See however Panic (1992) and Eichengreen (1996).
 
18
The reference here is to the planting and harvest seasons in the New World.
 
19
The phrase is from the Committee on Currency and Foreign Exchanges after the War (1919), which was looking back nostalgically at the prewar situation of the Bank of England in particular.
 
20
See Blanchard and Katz (1992), Eichengreen (1993), and Decressin and Fatas (1995).
 
21
On this see Dao et al. (2014) and Jauer et al. (2018).
 
22
See Phillips (2011) and, for a longer-term perspective, Marques and Gois (2016).
 
23
All three of which were recommended by critical observers during the Euro crisis.
 
24
A distinction made in a related connection by Frankel and Romer (1998).
 
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Metadata
Title
The Gold Standard and the Euro: Conjoined Twins or Distant Relations?
Author
Barry Eichengreen
Copyright Year
2021
Book
Economic Globalization and Governance

Print ISBN: 978-3-030-53264-2

Electronic ISBN: 978-3-030-53265-9

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-3-030-53265-9_7