TY  - JOUR
AU  - Eichengreen, Barry
AU  - Jeanne, Olivier
TI  - Currency Crisis and Unemployment: Sterling in 1931
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6563
PY  - 1998
Y2  - May 1998
DO  - 10.3386/w6563
UR  - http://www.nber.org/papers/w6563
L1  - http://www.nber.org/papers/w6563.pdf
N1  - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu

Olivier Jeanne
Department of Economics
Johns Hopkins University
582 Wyman Bldg.
3400 N. Charles Street
Baltimore, MD 21218
Tel: 410/516-7604
Fax: 410/516-7600
E-Mail: ojeanne@jhu.edu
M1  - published as Barry Eichengreen, Olivier Jeanne. "Currency Crisis and Unemployment: Sterling in 1931," in Paul Krugman, editor, "Currency Crises" University of Chicago Press (2000)

AB  - This paper studies the role of unemployment in sterling's interwar experience.  According to most narrative accounts, the proximate cause of the 1931 sterling crisis was a high and rising unemployment rate that placed pressure on British governments to pursue reflationary policies.  We present a model which, in the spirit of the  second generation' approach to currency crises, highlights the conflict between the objective of low unemployment and defense of the currency and show that it can reproduce the main features of sterling's interwar experience.  Econometric evidence lends further support to the view that the proximate cause of the sterling crisis was the dramatic rise in unemployment brought about by external deflationary forces.
ER  -