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Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity across the Colonies versus across the States, 1748-1811

  • Farley Grubb

    ()

    (Department of Economics,University of Delaware)

Exchange rates and price indices are constructed to test purchasing power parity between eight British North American colonial locations, five of whom issued their own fiat paper money. Purchasing power parity is then tested between these same locations after six became states politically and monetarily unified under the U.S. Constitution. Purchasing power parity cannot be rejected between all colonial locations or between the six U.S. states, if anything holding with more confidence prior to U.S. political and monetary unification. But it is rejected between U.S. states and nearby British colonies that stayed outside the U.S. union.

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File URL: http://www.nber.org/papers/w13836
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Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 08-11.

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Length: 60 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:dlw:wpaper:08-11.
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Web page: http://www.lerner.udel.edu/departments/economics/department-economics/

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  1. Charles Engel & John H. Rogers, 1995. "How wide is the border?," International Finance Discussion Papers 498, Board of Governors of the Federal Reserve System (U.S.).
  2. Alan M. Taylor, 2000. "Potential Pitfalls for the Purchasing-Power-Parity Puzzle? Sampling and Specification Biases in Mean-Reversion Tests of the Law of One Price," NBER Working Papers 7577, National Bureau of Economic Research, Inc.
  3. Heckelman, Jac C. & Dougherty, Keith L., 2007. "An Economic Interpretation of the Constitutional Convention of 1787 Revisited," The Journal of Economic History, Cambridge University Press, vol. 67(04), pages 829-848, December.
  4. McGuire, Robert A., 2003. "To Form a More Perfect Union: A New Economic Interpretation of United States Constitution," OUP Catalogue, Oxford University Press, number 9780195139709.
  5. Froot, Kenneth A. & Rogoff, Kenneth, 1995. "Perspectives on PPP and long-run real exchange rates," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 32, pages 1647-1688 Elsevier.
  6. Alan M. Taylor & Mark P. Taylor, 2004. "The Purchasing Power Parity Debate," NBER Working Papers 10607, National Bureau of Economic Research, Inc.
  7. David C. Parsley & Shang-Jin Wei, 1996. "Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations," NBER Working Papers 5654, National Bureau of Economic Research, Inc.
  8. Shambaugh, Jay C., 2006. "An experiment with multiple currencies: the American monetary system from 1838-60," Explorations in Economic History, Elsevier, vol. 43(4), pages 609-645, October.
  9. Stephen G. Cecchetti & Nelson C. Mark & Robert J. Sonora, 2002. "Price Index Convergence Among United States Cities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1081-1099, November.
  10. Farley Grubb, 2003. "Creating the U.S. Dollar Currency Union, 1748–1811: A Quest for Monetary Stability or a Usurpation of State Sovereignty for Personal Gain?," American Economic Review, American Economic Association, vol. 93(5), pages 1778-1798, December.
  11. Michael D. Bordo & Eugene N. White, 1991. "British and French Finance During the Napoleonic Wars," NBER Working Papers 3517, National Bureau of Economic Research, Inc.
  12. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
  13. Bordo, Michael D. & Marcotte, Ivan A., 1987. "Purchasing power parity in colonial America: Some evidence for South Carolina 1732-1774 a comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 27(1), pages 311-323, January.
  14. Kausik Chaudhuri & Jeffrey Sheen, 2004. "Purchasing Power Parity Across States and Goods Within Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 314-329, 09.
  15. Walton, Gaby M., 1968. "New Evidence on Colonial Commerce," The Journal of Economic History, Cambridge University Press, vol. 28(03), pages 363-389, September.
  16. Thomas, Robert Paul, 1965. "A Quantitative Approach to the Study of the Effects of British Imperial Policy upon Colonial Welfare: Some Preliminary Findings," The Journal of Economic History, Cambridge University Press, vol. 25(04), pages 615-638, December.
  17. repec:cup:cbooks:9780521038218 is not listed on IDEAS
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