IDEAS home Printed from
   My bibliography  Save this paper

Imports and the Jacksonian Economy: The Business Cycle and the Balance of Payments


  • T. J. O. Dick
  • John E. Floyd


Anglo-American financial interrelations in the decades before the American Civil War have long been studied to understand better the business cycle phenomena surrounding the demise of the Second Bank of the United States and the victory of the Currency School over the Bank of England in 1844. Inasmuch as gold and silver discoveries, their mining, and their monetization were also features of the period, the price-specie-flow theory of balance of payments adjustment has been at the center of many attempts to explain the propagation and transmission of business cycles. By contrast, we show that the remarkable international mobility of capital holds the key to the connection between the balance of payments and business cycles. A portfolio approach to balance of payments adjustment is developed and found to be more consistent than price-specie-flow theory with basic macroeconomic aggregates for the the 1820-60 period. To the extent that money supply shocks account for the cycle, their influence is limited to their impact made via changes in the world money stock. Because individual country price levels under the prevailing metallic and bimetallic standards are defined relative to the world price level, they depend on both the world money stock and real market forces that distinguish one country from another. Money supply shocks relative to world money stocks do not appear to have been large enough to account for the magnitude of cycles in this period, suggesting the possibility that cycles could have been dominated by real shocks.

Suggested Citation

  • T. J. O. Dick & John E. Floyd, 2001. "Imports and the Jacksonian Economy: The Business Cycle and the Balance of Payments," Working Papers floyd-01-01, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:floyd-01-01

    Download full text from publisher

    File URL:
    File Function: MainText
    Download Restriction: no

    File URL:
    File Function: MainText
    Download Restriction: no

    More about this item


    gold standard; international capital mobility; money; prices; cycles;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:floyd-01-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.