The Validity of International Gold Movement Statistics

By Oskar Morgenstern | Go to book overview

I. Introduction

IT IS the purpose of this paper to examine the statistics of international gold movements for their reliability and usefulness. An investigation of this kind is justified for the light it may shed on the problem of analysis of economic data in general, and, specifically, because gold movements are of great importance in the study of international trade, especially the behavior of exchange rates and capital movements. Gold movements are of particular significance for our understanding of the period of the gold standard, but they are also important under other monetary systems. Their accuracy, it should be noted, is probably one of the least questionable of all the components of balance of payments statistics, certainly not to be compared with such items as security movements, the pure estimates of tourists' expenditures, and immigrants' remittances. It is of singular importance to form a good idea of the worth of one of the most trustworthy components. In the absence of fortuitously offsetting errors, the aggregate, formed of parts of widely diverse quality, cannot be better than the best part--in fact, it will in almost all cases be considerably below that standard.1

A study of the statistics of international gold movements is a part of the larger question of the accuracy of economic observations in general and of those of trade in particular. 2But in the

____________________
1
The study described in the following pages grew out of the work involved in a larger investigation that has been undertaken for the National Bureau of Economic Research, to be published in the near future by Princeton University Press under the title International Financial Transactions and Business Cycles. In the course of this investigation, gold movements, gold points, their relations to exchange rates, etc. had to be examined. It was hoped that significant correlations could be computed, on the basis of monthly data, for exchange rates and gold movements for the important countries of the world during a period from approximately 1870 to 1939. However, studies by other writers of these relationships had already shown that it was very difficult, if possible, to obtain intelligible and significant relationships. The question therefore arose whether there might be troubles with the basic statistics themselves. Few difficulties are to be expected or found in the statistics of exchange rates. Statistics of gold points are non-existent; a collection of all accessible information about gold points for New York, London, Paris, and Berlin from 1870-1938 is made in Chapter V of my above-mentioned forthcoming book. The plentiful statistics of gold movements lent themselves to an investigation of their accuracy.
2
See my book, On the Accuracy of Economic Observations, Princeton: Princeton University Press, 1950; second revised edition, 1956.

-1-

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The Validity of International Gold Movement Statistics
Table of contents

Table of contents

  • Title Page *
  • Contents *
  • Tables and Charts *
  • The Author *
  • I. Introduction 1
  • Ii. Uses of Gold Movement Statistics 5
  • Iii. the Test of Validity 9
  • V. Summary and Conclusions 38
  • Appendix 41
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