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Were there Anomalies in the Sterling-Franc Exchange Rate Regulation during the Mid-19th Century?

Author

Listed:
  • Claude Diebolt

    (Association Française de Cliométrie (AFC), BETA/CNRS, Université Louis Pasteur de Strasbourg & Humboldt-Universität zu Berlin.)

  • Antoine Parent

    (Association Française de Cliométrie (AFC), BETA/CNRS, UMR 7522, Université Louis Pasteur de Strasbourg.)

Abstract

In this paper, we test whether French and British central banks discount rates were an efficient tool for currency stabilisation over the 1850-1870 period. Causality and impulse analysis as well as outlier methodology are carried out in order to test this proposition. We give strong evidence that the discount rate differential between France and England had a crucial corrective influence on the Sterling-Franc spot exchange rate. Regarding this exchange rate regulation hypothesis, we find only one single anomaly which occurred in February 1861. The assessment of the historical context helps to understand this peculiar event. We conclude to the absence of anomalies in the Sterling-Franc exchange rate regulation over the 1850-1870 period.

Suggested Citation

  • Claude Diebolt & Antoine Parent, 2006. "Were there Anomalies in the Sterling-Franc Exchange Rate Regulation during the Mid-19th Century?," Working Papers 06-08, Association Française de Cliométrie (AFC).
    • Handle: RePEc:afc:wpaper:06-08
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    References listed on IDEAS

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    More about this item

    Keywords

    Exchange rate; Discount rate; Regulation; Causality and impulse analysis; Outliers; Cliometrics;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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