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The making of a national currency. Spatial transaction costs and money market integration in Spain (1825-1874)

Author

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  • Aslanidis, Nektarios
  • Herranz-Lonc�n, Alfonso
  • Nogues-Marco, Pilar

Abstract

This article analyses the integration of the Spanish money market in the 19th century. We use a Band-TAR model of prices in Madrid of bills of exchange on 9 Spanish cities to measure convergence and efficiency in the market between 1825 and 1875. While price gaps between cities were significantly reduced during the period, no progress took place in efficiency. We suggest that increasing convergence was associated to the reduction in transaction costs, which started before the railways through improvements in roads and postal services. By contrast, increases in efficiency were prevented by a very restrictive regulation of arbitrage.

Suggested Citation

  • Aslanidis, Nektarios & Herranz-Lonc�n, Alfonso & Nogues-Marco, Pilar, 2017. "The making of a national currency. Spatial transaction costs and money market integration in Spain (1825-1874)," CEPR Discussion Papers 12453, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12453
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    References listed on IDEAS

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    Cited by:

    1. Pablo Martín-Aceña, 2018. "Money in Spain. New historical statistics. 1830-1998," Working Papers 1806, Banco de España;Working Papers Homepage.
    2. Irigoin, Alejandra, 2016. "Representation Without Taxation, Taxation Without Consent: The Legacy Of Spanish Colonialism In America," Revista de Historia Económica, Cambridge University Press, vol. 34(02), pages 169-208, September.

    More about this item

    Keywords

    Bills of Exchange; Financial Development; Legal Systems; Money Market Convergence; Money Market Efficiency; Money Market Integration; Real Bills Doctrine; Spanish National Currency; Specie-Point Mechanism; transaction costs;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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