The Real Exchange Rate and Fiscal Policy During the Gold Standard PeriodEvidence from the United States and Great Britain
AbstractWe study the determinants of the dollar/pound real exchange rate from 1879 to 1914 focusing on the role of fiscal policy. We present a simple dynamic model of the real exchange rate to frame our analysis. The econometric results are based upon the decomposition of the sources of the innovation of the real exchange rate drawn from a structural vector autoregression model. We find little evidence that changes in tariffs and government spending affected the real exchange rate. There is some stronger empirical evidence that shocks to deficits were associated with the fluctuations in the real exchange rate.
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Date of creation: Jul 1994
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- Graciela L. Kaminsky & Michael Klein, 1994. "The real exchange rate and fiscal policy during the gold standard period: evidence from the United States and Great Britain," International Finance Discussion Papers 482, Board of Governors of the Federal Reserve System (U.S.).
- F31 - International Economics - - International Finance - - - Foreign Exchange
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
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