Working Papers, Department of Economics, Lund University
Belling the cat: Eli F. Heckscher on the gold standard as a discipline device
Abstract: Unlike Knut Wicksell, Eli Heckscher did not believe the
time had arrived for “managed money” to replace the gold standard after
World War I. The war had shown that only a gold standard could bind the
central bank to a time-consistent policy with reasonable price stability.
Heckscher likened the problem of reinstating the gold standard to “Belling
the cat” in Aesop’s fable. When the international gold standard crumbled in
the Great Depression, he supported the Swedish price stabilization regime
as a temporary system. Heckscher was an early discoverer of the
time-consistency problem in monetary policy and hence stressed the
importance of the institutional framework of monetary policy.
Keywords: Heckscher; time-consistent policy; devaluation; deflation; gold standard; (follow links to similar papers)
JEL-Codes: B22; E31; E42; (follow links to similar papers)
35 pages, June 14, 2011
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- This paper is published as:
Fregert, Klas, (2013), 'Belling the cat: Eli F. Heckscher on the gold standard as a discipline device', History of Political Economy, Vol. 45, No. 1, pages 39-59
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