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The Empirics of International Currencies: Evidence from the 19th Century

Listed author(s):
  • Marc Flandreau

    (Centre for Finance and Development)

  • Clemens Jobst

    (Research Center of the Institute for America's Future)

Using a new database for the late 19th century, when the pound sterling circulated all over the world, this paper provides the first review of critical empirical issues in the economics of international currencies. First, we report evidence in favor of the search-theoretic approach to international currencies. Second, we give empirical support to strategic externalities. Third, we provide strong confirmation of the existence of persistence. Finally, we reject the view that the international monetary system is subject to pure path dependency in that it cannot remain locked into some past equilibrium. Our conclusion is that, for the late 19th century at least, money and trade were complements.

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File URL: http://spire.sciencespo.fr/hdl:/2441/669/resources/cfi-wp-mf-cepr5529.pdf
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Paper provided by Sciences Po in its series Sciences Po publications with number n°5529.

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Date of creation: Mar 2006
Handle: RePEc:spo:wpmain:info:hdl:2441/669
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  15. Paul R. Krugman, 1979. "Vehicle Currencies And the Structure Of International Exchange," NBER Working Papers 0333, National Bureau of Economic Research, Inc.
  16. Flandreau, Marc & Jobst, Clemens, 2005. "The Ties that Divide. A Network Analysis of the International Monetary System," CEPR Discussion Papers 5129, C.E.P.R. Discussion Papers.
  17. Liebowitz, S J & Margolis, Stephen E, 1990. "The Fable of the Keys," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 1-25, April.
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  20. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
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  23. Yiting Li & Akihiko Matsui, 2005. "A Theory of International Currency and Seigniorage Competition," CIRJE F-Series CIRJE-F-363, CIRJE, Faculty of Economics, University of Tokyo.
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