A SIMPLE-MODEL OF THE GOLD STANDARD

This paper presents a model of the gold standard in which technology a nd preferences are modeled explicitly, and account is taken of both th e durability of gold and the exhaustibility of gold ore. We examine th e steady state and its associated dynamics, and show how the steady-st ate price level responds to changes in exogenous factors. provided we have an interior solution with unmined gold in the steady state, this price level rises with technological progress in gold mining, and fall s with increases in real income and the discount rate. However, the st eady-state price level behaves somewhat differently if we have a corne r solution.