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How does international monetary leadership end? The Sterling Area revisited

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Listed:
  • De Bromhead, Alan
  • Jordan, David
  • Kennedy, Francis
  • Seddon, Jack

Abstract

How does international monetary leadership end? This paper examines the decline of the Sterling Area between 1945 and 1979 to understand the process of international economic disintegration. Using an original cross-national panel dataset, we conduct survival analysis which systematically evaluates a comprehensive set of economic and political factors about when and why countries chose to leave the Sterling Area. We find that membership of the Sterling Area was determined by multidimensional aspects. Our results highlight the significance of international economic and geopolitical factors, such as trade and diplomatic alignment, on the decision to leave. However we also find that domestic political and historical factors, such as democracy and imperial legacy, played a role in the Sterling Area's unravelling. Finally, we use our results to examine the experience of individual countries and their decisions to leave the Sterling Area. Revisiting this history of a gradually dissolving economic order, played out in the shadow of Britain's waning imperial and economic power, has cautionary implications for the future of the US dollar order.

Suggested Citation

  • De Bromhead, Alan & Jordan, David & Kennedy, Francis & Seddon, Jack, 2021. "How does international monetary leadership end? The Sterling Area revisited," QUCEH Working Paper Series 21-02, Queen's University Belfast, Queen's University Centre for Economic History.
    • Handle: RePEc:zbw:qucehw:202102
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    More about this item

    Keywords

    The Sterling Area; international monetary regime; internationalcurrency; sterling; decline; disintegration;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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