Crash! Expectational aspects of the departures of the United Kingdom and the United States from the inter-war gold standard

This paper contains an investigation of the pressures on the UK and the USA to devalue their currencies against gold in 1931 and 1933, respectively. We derive time-series of realignment expectations for the pound and the dollar. Among our findings is that expectations are quite well explained by fundamental economic variables. The implication is drawn that macroeconomic events, some of them directly or indirectly under the influence of the authorities, were in part responsible eventually for jolting the UK and the USA off the gold standard. Furthermore, quantitative evidence is presented supporting the view that Federal Reserve monetary policy was constrained by international considerations