Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200505
Authors: 
Colvin, Christopher L.
Fliers, Philip
Year of Publication: 
2019
Series/Report no.: 
QUCEH Working Paper Series 2019-03
Abstract: 
Under what conditions can policymakers make demonstrably poor policy choices? By providing a new account of monetary policy management in the Netherlands during the interwar gold standard, we show how policymakers can fail to escape their long-held beliefs and refuse to consider available policy alternatives. Using high-frequency macroeconomic data, we are the first to document that the Netherlands' policymakers were able to conduct an independent monetary policy in the 1930s. We then show how this independence was squandered on fixing the guilder's exchange rate, a policy which led only to deflation, trade deficits, corporate bankruptcies and mass unemployment. We explain the government's policy stance by documenting the beliefs of politicians and central bankers, and then by investigating how business leaders and public intellectuals attempted to influence these beliefs.
Subjects: 
monetary policy
exchange rate policy
gold standard
interwar period
the Netherlands
JEL: 
N14
E42
E52
E58
Document Type: 
Working Paper
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