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Exchange-Rate Regimes and International Trade: Evidence from the=20 Classical Gold Standard Era

  • J. Ernesto L=F3pez-C=F3rdova

    (Inter-American Development Bank)

  • = =20 Chris Meissner

    (University of California, Berkeley)

In this paper we show that the spread of the classical gold=20 standard in the late nineteenth century increased international trade=20 flows. This positive effect was compounded whenever a group of countries=20 formed a monetary union. Applying the gravity model of trade to more than=20 1,100 country pairs during the 1870-1910 period, we find that two countries= =20 on gold would trade 60 percent more with each other than with countries on= =20 a different monetary standard. Moreover, a monetary union would more than=20 double bilateral trade flows. Our findings are relevant for current=20 discussions on alternative monetary arrangements for the twenty-first= century.

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Paper provided by EconWPA in its series Labor and Demography with number 0012003.

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Length: 52 pages
Date of creation: 09 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpla:0012003
Note: 52 pages, Acrobat .pdf
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Frankel, Jeffrey & Rose, Andrew K., 2001. "An Estimate of the Effect of Common Currencies on Trade and Income," Working Paper Series rwp01-013, Harvard University, John F. Kennedy School of Government.
  2. Kevin H. O'Rourke & Jeffrey G. Williamson, 2000. "When Did Globalization Begin?," NBER Working Papers 7632, National Bureau of Economic Research, Inc.
  3. Maurice Obstfeld, 1997. "Europe's gamble," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 241-317.
  4. Rose, Andrew, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," Seminar Papers 678, Stockholm University, Institute for International Economic Studies.
  5. Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
  6. Frieden, Jeffry A., 1997. "Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation," The Journal of Economic History, Cambridge University Press, vol. 57(02), pages 367-395, June.
  7. Wyplosz, Charles, 1997. "EMU: Why and How It Might Happen," CEPR Discussion Papers 1685, C.E.P.R. Discussion Papers.
  8. Frankel, Jeffrey A & Rose, Andrew K, 2000. "An Estimate of the Effect of Currency Unions on Trade and Output," CEPR Discussion Papers 2631, C.E.P.R. Discussion Papers.
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