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Exchange-Rate Regimes and International Trade: Evidence from the=20 Classical Gold Standard Era

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Author Info

  • J. Ernesto L=F3pez-C=F3rdova

    (Inter-American Development Bank)

  • = =20 Chris Meissner

    (University of California, Berkeley)

Abstract

In this paper we show that the spread of the classical gold=20 standard in the late nineteenth century increased international trade=20 flows. This positive effect was compounded whenever a group of countries=20 formed a monetary union. Applying the gravity model of trade to more than=20 1,100 country pairs during the 1870-1910 period, we find that two countries= =20 on gold would trade 60 percent more with each other than with countries on= =20 a different monetary standard. Moreover, a monetary union would more than=20 double bilateral trade flows. Our findings are relevant for current=20 discussions on alternative monetary arrangements for the twenty-first= century.

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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0012003.

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Length: 52 pages
Date of creation: 09 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpla:0012003

Note: 52 pages, Acrobat .pdf
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Web page: http://128.118.178.162

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  1. Frieden, Jeffry A., 1997. "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," The Journal of Economic History, Cambridge University Press, vol. 57(02), pages 367-395, June.
  2. Charles Wyplosz, 1997. "EMU: Why and How It Might Happen," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 3-21, Fall.
  3. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May.
  4. Frankel, Jeffrey A & Rose, Andrew K, 2000. "An Estimate of the Effect of Currency Unions on Trade and Output," CEPR Discussion Papers 2631, C.E.P.R. Discussion Papers.
  5. O Rourke, Kevin H. & Williamson, Jeffrey G., 2002. "When did globalisation begin?," European Review of Economic History, Cambridge University Press, vol. 6(01), pages 23-50, April.
  6. Andrew K. Rose, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," NBER Working Papers 7432, National Bureau of Economic Research, Inc.
  7. Maurice Obstfeld, 1997. "Europe's gamble," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 241-317.
  8. Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
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Cited by:
  1. Alberto Alesina & Robert Barro & Silvana Tenreyro, 2002. "Optimal Currency Areas," Harvard Institute of Economic Research Working Papers 1958, Harvard - Institute of Economic Research.
    • Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2003. "Optimal Currency Areas," NBER Chapters, in: NBER Macroeconomics Annual 2002, Volume 17, pages 301-356 National Bureau of Economic Research, Inc.

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