The microeconomics of bullionism : arbitrage, smuggling and silver outflows in Spain in the early 18th century
In the Early Modern period, there was a systematic flow of precious metals from the American colonies to Spain and Portugal and, from there, throughout the world. In this paper, I use newly discovered data on the black market for silver in Cadiz to reconstruct a picture of Castilian smuggling and international silver flows in the Age of Bullionism (1729-1741). The arbitrage equation shows persistent violations of the silver-point that made arbitrage systematically profitable until devaluation pegged the exchange rate to the arbitrated parity. Market structure explains the persistent violations. The Cadiz shadow price was lower than the international market price because bullionist regulations configured an oligopsonistic structure. The price gap was the reason for the Castilian silver outflows to Europe
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- Pilar Nogues-Marco, 2011. "Tipos de cambio y tipos de interés en Cádiz en el siglo XVIII (1729-1788)," Estudios de Historia Económica, Banco de España;Estudios de Historia Económica Homepage, number 58.
- Nogues-Marco, Pilar, 2013.
"Competing Bimetallic Ratios: Amsterdam, London, and Bullion Arbitrage in Mid-Eighteenth Century,"
The Journal of Economic History,
Cambridge University Press, vol. 73(02), pages 445-476, June.
- Nogues-Marco, Pilar, 2011. "Competing bimetallic ratios: Amsterdam, London and bullion arbitrage in the 18th century," IFCS - Working Papers in Economic History.WH wp11-03, Universidad Carlos III de Madrid. Instituto Figuerola.
- Nogues-Marco, Pilar, 2013. "Competing Bimetallic Ratios: Amsterdam, London and Bullion Arbitrage in the Mid-18th Century," CEPR Discussion Papers 9300, C.E.P.R. Discussion Papers.