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Competing Bimetallic Ratios: Amsterdam, London and Bullion Arbitrage in the Mid-18th Century

  • Nogues-Marco, Pilar

This article analyzes the stability of bimetallism for countries operating in integrated bullion markets who enact different legal ratios. I articulate a new theoretical framework to demonstrate that two countries can both be bimetallic only if they coordinate their legal ratios. The theoretical framework is applied to the mid-18th century when London’s legal ratio was 3.8% higher than that of Amsterdam. I find that Amsterdam was effectively on the bimetallic standard, whereas London was on a de facto gold standard.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9300.

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Date of creation: Jan 2013
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Handle: RePEc:cpr:ceprdp:9300
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  1. Kindleberger, Charles P., 1993. "A Financial History of Western Europe," OUP Catalogue, Oxford University Press, edition 2, number 9780195077384.
  2. Chau-nan Chen, 1972. "Bimetallism: Theory and Controversy in Perspective," History of Political Economy, Duke University Press, vol. 4(1), pages 89-112, Spring.
  3. Garber, Peter M, 1986. "Nominal Contracts in a Bimetallic Standard," American Economic Review, American Economic Association, vol. 76(5), pages 1012-30, December.
  4. Marcuzzo, Maria Cristina & Rosselli, Annalisa, 1987. "Profitability in the International Gold Market in the Early History of the Gold Standard," Economica, London School of Economics and Political Science, vol. 54(215), pages 367-80, August.
  5. Arthur J. Rolnick & Warren E. Weber, 1986. "Gresham's law or Gresham's fallacy?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 17-24.
  6. Eugene Canjels & Gauri Prakash-Canjels & Alan M. Taylor, 2004. "Measuring Market Integration: Foreign Exchange Arbitrage and the Gold Standard, 1879-1913," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 868-882, November.
  7. Rolnick, Arthur J & Weber, Warren E, 1986. "Gresham's Law or Gresham's Fallacy?," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 185-99, February.
  8. Stephen Quinn, 1996. "Gold, silver, and the Glorious Revolution: arbitrage between bills of exchange and bullion," Economic History Review, Economic History Society, vol. 49(3), pages 473-490, 08.
  9. Marc Flandreau & Christophe Galimard & Clemens Jobst & Pilar Nogués-Marco, 2009. "Monetary geography before the Industrial Revolution," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 2(2), pages 149-171.
  10. Rui Esteves & Jaime Reis, 2007. "Market Integration in the Golden Periphery,The Lisbon/London Exchange, 1854-1891," Economics Series Working Papers 338, University of Oxford, Department of Economics.
  11. Pilar Nogues-Marco, 2011. "The microeconomics of bullionism : arbitrage, smuggling and silver outflows in Spain in the early 18th century," Working Papers in Economic History wp11-05, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
  12. Oskar Morgenstern, 1959. "International Financial Transactions and Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number morg59-1.
  13. Canjels, Eugene & Prakash-Canjels, Gauri & Taylor, Alan M., 2004. "Measuring Market Integration: Foreign Exchange Arbitrage and the Gold Standard 1874-1913," CEPR Discussion Papers 4492, C.E.P.R. Discussion Papers.
  14. Oppers, Stefan Erik, 1996. "Was the worldwide shift to gold inevitable? An analysis of the end of bimetallism," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 143-162, February.
  15. Clark, Truman A, 1984. "Violations of the Gold Points, 1890-1908," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 791-823, October.
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