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The Empirics of International Currencies: Evidence from the 19th Century

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  • Clemens Jobst

    (Research Center of the Institute for America's Future)

  • Marc Flandreau

    (Centre for Finance and Development)

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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Bibliographic Info

Paper provided by Sciences Po in its series Sciences Po publications with number n°5529.

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Date of creation: Mar 2006
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Handle: RePEc:spo:wpmain:info:hdl:2441/669

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Keywords: International currencies; Search theoretic approach to money; Strategic externalities;

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