This semester, I am lucky enough to be among the 40 fellows in residence at the Netherlands Institute for Advanced Study in the Humanities and Social Sciences in Amsterdam. This interdisciplinary institute, moulded after the Institute for Advanced Study in Princeton, hosts scholars conducting research from across the humanities and social sciences, from art history to epidemiology. We even have a poet!
I am working on the Dutch experience of the interwar gold standard. This is a co-authored project with Philip Fliers. We will be presenting a work-in-progress version of our paper at the Economic History Society Annual Conference in Belfast, in April.
As part of this project, I am about to start reading various biographies of Hendrikus Colijn, the prime minister in charge when the Dutch economy started going south in the 1930s. Colijn was a steadfast believer in gold, despite all the evidence that maintaining the link between the guilder and this precious metal was a really bad idea. How did he justify his policy beliefs?
An Economist's Guide to Economic History is all about learning from the past. Today we don't use gold standards. And most countries have abandoned fixed exchange rates. Yet I believe there remains lots to be learnt from the Netherlands in the 1930s.
As my NIAS colleague Bas Jacobs explains in his current research, Europe's recovery from the 2008 crisis was worse than its recovery in the 1930s. This is also the case for the Netherlands, which did particularly badly in the 1930s. Just as Colijn was enthralled in the dogma of gold, politicians and central bankers today also appear to also captured by long-debunked economic theories.