ABSTRACT The paper aims to establish interfaces between the Great Depression of the 1930s under the Gold Standard and the recent European Crisis under the Euro. It is argued that, despite their specificities, both crises revealed the potentially harmful effects, in economic and social terms, of institutional arrangements that considerably reduce the autonomy of monetary, fiscal and exchange rate policies of participating countries, without being accompanied by increased cooperation between them, which should be led by a global (in the case of the Great Depression) or regional (in the case of the European Crisis) hegemonic power, which is not only capable of, but is also willing to act as a buyer and lender of last resort, especially in circumstances characterized by increased uncertainty, the deterioration of the general state of expectations and increased liquidity preference. In fact, central European countries in the past and peripheral European countries nowadays were effectively pushed toward deflationary adjustments in which a reduction of prices and wages was accompanied by a reduction of output and employment levels. Thus, in the absence of the possibility of restoring the autonomy of economic policy, the overcome of the crisis necessarily requires, both before - under the Gold Standard - and nowadays - under the Euro -, joint actions aimed to assure that the responsibility for the adjustment will be equally distributed among all the economies, in order to avoid that some of them benefit at the expense of the others in this process.
The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison
