Thursday, January 12, 2012 9:54am

Gold Standard

Question A:

If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: There are many factors besides US inflation risk that influence the current dollar price of gold.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 3
A gold standard would have avoided the policy mistakes of the 2000s, but still likely that discretionary policy is useful during recessions
Bio/Vote History
         
Alesina Alberto Alesina Harvard Disagree 7
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Disagree 8
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Disagree 8
Bio/Vote History
         
Autor David Autor MIT Disagree 4
Bio/Vote History
         
Baicker Katherine Baicker Harvard Strongly Disagree 3
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Harvard Disagree 4
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 10
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 2
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 8
Bio/Vote History
         
Deaton Angus Deaton Princeton Disagree 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Disagree 10
A time series plot of the price of consumption in ounces of gold, and then in US dollars, clarifies that gold is not a stable standard.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Strongly Disagree 10
Bio/Vote History
         
Fair Ray Fair Yale Strongly Disagree 10
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
eesh. Has it come to this?
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 5
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Disagree 10
Modern interest-rate feedback rules (Taylor rules) do a vastly better job. The instability of the relative price of gold is way too high.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Disagree 10
All insights from the past and current crises go against a gold standard.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Disagree 7
Since gold has supply and demand dynamics of its own, for reasons unrelated to its use as a store of value, Americans would exposed to risk.
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 8
The relative price of gold can be very volatile.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Disagree 10
A gold standard regime would be a disaster for any large advanced economy. Love of the G.S. implies macroeconomic illiteracy.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 8 Bio/Vote History
         
Lazear Edward Lazear Stanford Disagree 6
The gold standard adds credibility when a country lacks discipline.The cost is monetary polic flexibility. The tradeoff is unclear in US.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 8
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Disagree 10
This proposal makes no sense in the modern world. Just look at the Eurozone to see the consequences.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Strongly Disagree 10
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Did Not Answer
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 7
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Disagree 8
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 9
Bio/Vote History
         
Shin Hyun Song Shin Princeton Strongly Disagree 9
Bio/Vote History
         
Stock James Stock Harvard Strongly Disagree 8
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Disagree 7
There are much better ways to avoid excessive inflation, while maintaining the flexibility of a fiat currency.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 7
Why tie to gold? why not 1982 Bordeaux?
Bio/Vote History
         
Udry Christopher Udry Yale Disagree 2
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Disagree 8
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Agree 3
Gold is intrinsically close to useless, so its price is determined as a "bubble".
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 9
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 8
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Agree 10
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard Strongly Agree 3
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Harvard Strongly Agree 5
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Agree 10
Bio/Vote History
         
Currie Janet Currie Princeton Agree 6
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Agree 10
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 4
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 10
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Strongly Agree 10
Bio/Vote History
         
Fair Ray Fair Yale Strongly Agree 10
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Strongly Agree 8
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 4
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
new gold reserve discoveries and changes in the technology of extraction, to name two simple examples
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 7
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 8
So many that they would never fit in 140 characters...
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Agree 10
Gold is used as a safe haven in financial crisis. That has little to do with US inflation.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 10
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Agree 9
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 10
Go see a dentist.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 10
Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 8
This is a market like any other. The supply of gold and other sources of demand affect its price in real terms relative to other goods.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 8
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 10
There is no discernible connection between gold price and CPI movements in the period since the demonetization of gold in 1971.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Strongly Agree 10
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Did Not Answer
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 5
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Agree 9
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 6
Bio/Vote History
         
Shin Hyun Song Shin Princeton Strongly Agree 9
Bio/Vote History
         
Stock James Stock Harvard Strongly Agree 9
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 7
Demand for gold seems to come from concern about the entire financial system. There are better ways to hedge inflation risk.
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 7
Bio/Vote History
         
Udry Christopher Udry Yale Agree 7
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Agree 10
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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