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Market Integration in the Golden Periphery - the Lisbon/London Exchange, 1854-1891

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  • Rui Pedro Esteves
  • Jaime Reis
  • Fabiano Ferramosca

Abstract

The existence of a self-regulating arbitrage mechanism under the gold standard has been traditionally considered as one of its main advantages, and attracted a corresponding research interest. This research is arguably relevant not only to test for the efficiency of the “gold points”, but also to study the evolution of financial integration during the so-called first era of globalization. Our first aim with this paper is to contribute to the enlargement of the scope of the literature by considering the case of Portugal that adhered to the system, in 1854, at a much earlier phase than the majority of countries, thus allowing for a broader perspective on the evolution of the efficiency of the foreign exchange market. As a typical “peripheral” country, Portugal can be used as the starting point for a study of the degree of integration of the periphery within the system. Furthermore, the Portuguese exchange also illustrates the role in practice of large players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation assumed in conventional theoretical frameworks. We also address the question of the credibility of the authorities’ commitment to the standard, through the perspective of the target zone literature.

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Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200515.

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Date of creation: 2005
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Handle: RePEc:ptu:wpaper:w200515

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Citations

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Cited by:
  1. David Grreasley, 2010. "Cliometrics and Time Series Econometrics: Some Theory and Applications," Working Papers in Economics 10/56, University of Canterbury, Department of Economics and Finance.
  2. Paulo Soares Esteves, 2009. "Are ATM/POS Data Relevant When Nowcasting Private Consumption?," Working Papers w200925, Banco de Portugal, Economics and Research Department.
  3. George Chouliarakis & Sophia Lazaretou, 2014. "Deja vu? The Greek crisis experience, the 2010s versus the 1930s. Lessons from history," Working Papers 176, Bank of Greece.
  4. Fajardo, José & Lacerda, Ana, 2010. "Statistical arbitrage with default and collateral," Economics Letters, Elsevier, vol. 108(1), pages 81-84, July.
  5. Rui Pedro Esteves & Jaime Reis & Fabiano Ferramosca, 2005. "Market Integration in the Golden Periphery - the Lisbon/London Exchange, 1854-1891," Working Papers w200515, Banco de Portugal, Economics and Research Department.
  6. Coşkun Tunçer, 2012. "Monetary sovereignty during the classical gold standard era: the Ottoman Empire and Europe, 1880-1913," Economic History Working Papers 44725, London School of Economics and Political Science, Department of Economic History.
  7. David Chilosi & Oliver Volckart, 2009. "Money, states and empire: financial integration cycles and institutional change in Central Europe, 1400-1520," Economic History Working Papers 27884, London School of Economics and Political Science, Department of Economic History.
  8. Morys, Matthias, 2013. "Discount rate policy under the Classical Gold Standard: Core versus periphery (1870s–1914)," Explorations in Economic History, Elsevier, vol. 50(2), pages 205-226.
  9. Fátima Cardoso & Paulo Soares Esteves, 2008. "The effects of low-cost countries on Portuguese manufacturing import prices," Working Papers w200804, Banco de Portugal, Economics and Research Department.

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