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Case 5: The gold standard /2547

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  • Read the articles below and answer the questions on the worksheet.

Primary reading

Kitson, M (2012), End of an Epoch: Britain’s Withdrawal from the Gold Standard, Judge Business School, University of Cambridge, June

Discussion questions

  1. Outline (a) how the gold standard was meant to function in theory and (b) Churchill’s case for Britain returning to gold (at pre-war parity).
  2. Identify the structural flaws Kitson identifies in the gold standard, in terms of both market responses and policy mechanisms.
  3. How were such structural flaws ‘starkly exposed’ by the Great Depression?
  4. What were the immediate and longer-term consequences of Britain leaving the gold standard in 1931?

Background reading

see w17 lecture reading

Crafts, N and Fearon, P (2010), Lessons from the 1930s Great Depression, Oxford Review of Economic Policy, v26 no3, pp 285-317

Middleton, R (2010), British monetary and fiscal policy in the 1930s, Oxford Review of Economic Policy, v26 no3, pp414-441

Reflective commentary question

What lessons should later policymakers have drawn from Britain’s experience with the Gold Standard in the inter-war period?