Quarterly Journal of Austrian Economics

Volume 6, No. 4 (Winter 2003)

In an age when deflation is widely feared and the threat of deflation serves as a justification for radical policy proposals, Bordo and Redish have done a great service in showing that deflation is not harmful to the economy, at least on the gold standard. However, they find an anomaly—a teaser—in Canada during the latter stage of the classical gold standard where positive monetary shocks led to positive shocks of increased economic output. The Klondike gold rush is offered here as the explanation for Bordo and Redish’s“surprising result.” All of the other factors (i.e., significant increases in land, labor,and capital) were no doubt important contributors to higher rates of economic