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Equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928-1935

Author

Listed:
  • Tai-kuang Ho

    (Department of Quantitative Finance, National Tsing Hua University, No. 101, Section 2, Kuang-Fu Road, Hsinchu, 30013, Taiwan)

  • Cheng-chung Lai

    (Department of Economics, National Tsing Hua University, Hsinchu, 30013, Taiwan)

  • Joshua Jr-shiang Gau

    (Directorate-General of Budget, Accounting and Statistics, Taipei, 100, Taiwan)

Abstract

We examine the equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928–1935. We find a robust long-run relationship between the Chinese dollar exchange rate and the metallic value of the Chinese dollar. The deviation from the equilibrium is short-lived and is quickly eliminated by arbitrage activities. We also find that governmental measures to limit free silver flows can disrupt this equilibrium relationship.

Suggested Citation

  • Tai-kuang Ho & Cheng-chung Lai & Joshua Jr-shiang Gau, 2013. "Equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928-1935," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 7(1), pages 87-98, January.
    • Handle: RePEc:afc:cliome:v:7:y:2013:i:1:p:87-98
    DOI: 10.1007/s11698-012-0079-6
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    Citations

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    Cited by:

    1. Ho, Tai-kuang & Lai, Cheng-chung, 2013. "Silver fetters? The rise and fall of the Chinese price level 1928–34," Explorations in Economic History, Elsevier, vol. 50(3), pages 446-462.
    2. G. Geoffrey Booth & Sanders S. Chang, 2017. "Domestic exchange rate determination in Renaissance Florence," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(3), pages 405-445, September.
    3. El-Shagi, Makram & Zhang, Lin, 2016. "Macroeconomic trade effects of vehicle currencies: Evidence from 19th century China," IWH Discussion Papers 23/2016, Halle Institute for Economic Research (IWH).

    More about this item

    Keywords

    Silver standard; Chinese economy; Cointegration;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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