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The Empirics of International Currencies: Historical Evidence

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Author Info
Flandreau, Marc
Jobst, Clemens

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Abstract

Using a new database for the late 19th century, when the pound sterling circulated all over the world, this paper provides the first review of critical empirical issues in the economics of international currencies. First, we report evidence in favor of the search-theoretic approach to international currencies. Second, we give empirical support to strategic externalities. Third, we provide strong confirmation of the existence of persistence. Finally, we reject the view that the international monetary system is subject to pure path dependency in that it cannot remain locked into some past equilibrium. Our conclusion is that, for the late 19th century at least, money and trade were complements.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5529.

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Date of creation: Mar 2006
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Handle: RePEc:cpr:ceprdp:5529

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Related research
Keywords: dollar; international currencies; persistence; search theoretic approach to money; sterling; strategic externalities;

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Find related papers by JEL classification:
F31 - International Economics - - International Finance - - - Foreign Exchange
N32 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - U.S.; Canada: 1913-

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