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Market Integration in the Golden Periphery,The Lisbon/London Exchange, 1854-1891

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  • Rui Esteves
  • Jaime Reis
  • Fabiano Ferramosca

Abstract

The existence of a self-regulating arbitrage mechanism under the gold standard has been traditionally considered as one of its main advantages, and attracted a corresponding research interest. This research is arguably relevant not only to test for the efficiency of the gold points, but also to study the evolution of financial integration during the so-called first era of globalization. Our first aim with this paper is to contribute to the enlargement of the scope of the literature by considering the case of Portugal that adhered to the system, in 1854, at a much earlier phase than the majority of countries, thus allowing for a broader perspective on the evolution of the efficiency of the foreign exchange market. As a typical peripheral country, Portugal can be used as the starting point for a study of the degree of integration of the periphery within the system. Furthermore, the Portuguese exchange also illustrates the role in practice of large players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation assumed in conventional theoretical frameworks. We also address the question of the credibility of the authorities` commitment to the standard, through the perspective of the target zone literature.

Suggested Citation

  • Rui Esteves & Jaime Reis & Fabiano Ferramosca, 2007. "Market Integration in the Golden Periphery,The Lisbon/London Exchange, 1854-1891," Economics Series Working Papers 338, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:338
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    2. George Chouliarakis & Sophia Lazaretou, 2014. "Deja vu? The Greek crisis experience, the 2010s versus the 1930s. Lessons from history," Working Papers 176, Bank of Greece.
    3. Esteves, Rui Pedro & Reis, Jaime & Ferramosca, Fabiano, 2009. "Market Integration in the Golden Periphery. The Lisbon/London Exchange, 1854-1891," Explorations in Economic History, Elsevier, vol. 46(3), pages 324-345, July.
    4. Paulo Esteves, 2009. "Are ATM/POS Data Relevant When Nowcasting Private Consumption?," Working Papers w200925, Banco de Portugal, Economics and Research Department.
    5. MARTÍNEZ-RUIZ, Elena & NOGUES-MARCO, Pilar, 2018. "The Political Economy of Exchange Rate Stability During the Gold Standard. Spain 1874—1914," Discussion paper series HIAS-E-75, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    6. G. Bazot & M. D. Bordo & E. Monnet, 2014. "The Price of Stability. The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)," Working papers 510, Banque de France.
    7. Jay Pil Choi & Taiji Furusawa & Jota Ishikawa, 2018. "Transfer Pricing and the Arm's Length Principle under Imperfect Competition," CESifo Working Paper Series 7303, CESifo.
    8. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    9. Stefano Ugolini, 2012. "The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s," European Review of Economic History, European Historical Economics Society, vol. 16(1), pages 51-73, February.
    10. Tunçer, Coşkun, 2012. "Monetary sovereignty during the classical gold standard era: the Ottoman Empire and Europe, 1880-1913," Economic History Working Papers 44725, London School of Economics and Political Science, Department of Economic History.
    11. Jaime Reis, 2007. "An ‘art’, not a ‘science’? Central bank management in Portugal under the gold standard, 1863–87," Economic History Review, Economic History Society, vol. 60(4), pages 712-741, November.
    12. Fajardo, José & Lacerda, Ana, 2010. "Statistical arbitrage with default and collateral," Economics Letters, Elsevier, vol. 108(1), pages 81-84, July.
    13. Fátima Cardoso & Paulo Esteves, 2008. "The effects of low-cost countries on Portuguese manufacturing import prices," Working Papers w200804, Banco de Portugal, Economics and Research Department.
    14. 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(2), pages 445-476, June.
    15. Chilosi, David & Volckart, Oliver, 2009. "Money, states and empire: financial integration cycles and institutional change in Central Europe, 1400-1520," Economic History Working Papers 27884, London School of Economics and Political Science, Department of Economic History.
    16. Morys, Matthias, 2013. "Discount rate policy under the Classical Gold Standard: Core versus periphery (1870s–1914)," Explorations in Economic History, Elsevier, vol. 50(2), pages 205-226.
    17. Martínez-Ruiz, Elena & Nogues-Marco, Pilar, 2017. "The political economy of exchange rate stability during the gold standard. The case of Spain, 1874-1914," Working Papers unige:91510, University of Geneva, Paul Bairoch Institute of Economic History.

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    More about this item

    Keywords

    Gold Standard; Credibility; Portugal; Pre-1913;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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