>>Chinese Silver Standard Economy
and the 1929 Great Depression
abstract
It is often said that the silver standard had insulated the Chinese economy from the Great
Depression that prevailed in the gold standard countries during the 1929-35 period. Using
econometric testing and counterfactual simulations, we show that if China had been on the
gold standard (or on the gold-exchange standard), the balance of trade of this semi-closed
economy would have been ameliorated, but the general price level would have declined
significantly. Due to limited statistics, two important factors (the GDP and industrial
production level) are not included in the analysis, but the general argument that the silver
standard was a lifeboat to the Chinese economy remains defensible.
Keywords: silver standard, Chinese economy (1929-35), the 1929 Great Depression.
JEL: E52, F33, N25
Cheng-chung Lai, Professor of Economics, National Tsing Hua University, Sinchu 30013,
Taiwan. Tel: +886-3-574.2891, fax: +886-3-572.2476 <lai@mx.nthu.edu.tw>.
Joshua Jr-shiang Gau, Staff, Economic Forecasting Division, Bureau of Statistics,
Directorate-General of Budget, Accounting and Statistics, Taipei 100, Taiwan. Tel:
886-2-2382.3854, fax: 886-2-2371.0197 <jjsgau@emc.dgbasey.gov.tw>.<<
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