The Empirics of International Currencies: Historical Evidence

40 Pages Posted: 15 Jun 2006

See all articles by Marc Flandreau

Marc Flandreau

Fondation Nationale des Sciences Politiques - Institut d'Etudes Politiques de Paris; Centre for Economic Policy Research (CEPR)

Clemens Jobst

Departement of Economic and Social History; Centre for Economic Policy Research (CEPR)

Date Written: March 2006

Abstract

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.

Keywords: International currencies, sterling, dollar, search theoretic approach to money, strategic externalities, persistence

JEL Classification: F31, N32

Suggested Citation

Flandreau, Marc and Jobst, Clemens, The Empirics of International Currencies: Historical Evidence (March 2006). CEPR Discussion Paper No. 5529, Available at SSRN: https://ssrn.com/abstract=909219

Marc Flandreau (Contact Author)

Fondation Nationale des Sciences Politiques - Institut d'Etudes Politiques de Paris ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France
+33 1 4046 7265 (Phone)
+33 1 4407 0750 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Clemens Jobst

Departement of Economic and Social History ( email )

Universitätsring 1
Vienna, Vienna 1010
Austria

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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