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Trade Effects of Silver Price Fluctuations in 19th Century China: A Macro Approach

Author

Listed:
  • Makram El-Shagi
  • Lin Zhang

    (Center for Financial Development and Stability at Henan University, Kaifeng, Henan)

Abstract

We assess the role of silver price fluctuations on Chinese trade and GDP during the late Qing dynasty, when China still had a bimetallic monetary system where silver was mostly used for trade. Using a structural VAR with a newly proposed small sample bias correction and blockwise recursive identification, we identify the impact of silver price shocks o the Chinese economy from 1867 to 1910. We find that silver price changes have substantial impact on trade, but barely affect GDP. Our results can partly be applied to the analysis of the role of vehicle currencies in today's emerging economies.

Suggested Citation

  • Makram El-Shagi & Lin Zhang, 2017. "Trade Effects of Silver Price Fluctuations in 19th Century China: A Macro Approach," CFDS Discussion Paper Series 2017/5, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.
    • Handle: RePEc:fds:dpaper:201705
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    Cited by:

    1. is not listed on IDEAS
    2. Peter Grajzl & Peter Murrell, 2022. "Did Caselaw Foster England’s Economic Development during the Industrial Revolution? Data and Evidence," CESifo Working Paper Series 10088, CESifo.
    3. Grajzl, Peter & Murrell, Peter, 2024. "Caselaw and England's economic performance during the Industrial Revolution: Data and evidence," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 145-165.
    4. Mensi, Walid & Vo, Xuan Vinh & Kang, Sang Hoon, 2021. "Time and frequency connectedness and network across the precious metal and stock markets: Evidence from top precious metal importers and exporters," Resources Policy, Elsevier, vol. 72(C).
    5. Jain, Prachi & Maitra, Debasish & McIver, Ron P. & Kang, Sang Hoon, 2023. "Quantile dependencies and connectedness between stock and precious metals markets," Journal of Commodity Markets, Elsevier, vol. 30(C).

    More about this item

    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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