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

Author

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  • J. Ernesto L=F3pez-C=F3rdova

    (Inter-American Development Bank)

  • = =20 Chris Meissner

    (University of California, Berkeley)

Abstract

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.

Suggested Citation

  • J. Ernesto L=F3pez-C=F3rdova & = =20 Chris Meissner, 2001. "Exchange-Rate Regimes and International Trade: Evidence from the=20 Classical Gold Standard Era," Labor and Demography 0012003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0012003
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    References listed on IDEAS

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    Cited by:

    1. Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2003. "Optimal Currency Areas," NBER Chapters, in: NBER Macroeconomics Annual 2002, Volume 17, pages 301-356, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean

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