Switch to gold standard could stabilise prices – Philadelphia Fed research
Hypothetical return to monetary system would only lead to short-term price movements, study finds
Long-run price stability could be a key feature of the gold standard, researchers with the Federal Reserve Bank of Philadelphia find.
In their working paper, published in February, Jesús Fernández-Villaverde and Daniel Sanches explore how the gold standard would operate as a monetary framework in a hypothetical small open economy economy.
They argue that the price level would consistently converge to its long-run equilibrium value. Inflation and deflation would be “merely temporary phenomena”
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