Market Integration in the Golden Periphery: The Lisbon/ London Exchange, 1854-1891

58 Pages Posted: 18 Mar 2012

See all articles by Rui Esteves

Rui Esteves

Graduate Institute of International and Development Studies (IHEID)

Jaime Reis

University of Lisbon - Institute of Social Science

Fabiano Ferramosca

Universidade do Porto - Faculdade de Letras

Date Written: August 2007

Abstract

The existence of a self-regulating arbitrage mechanism under the gold standard has been traditionally considered as one of its main advantages, and attracted a corresponding research interest. This research is arguably relevant not only to test for the efficiency of the "gold points", but also to study the evolution of financial integration during the so-called first era of globalization. Our first aim with this paper is to contribute to the enlargement of the scope of the literature by considering the case of Portugal that adhered to the system, in 1854, at a much earlier phase than the majority of countries, thus allowing for a broader perspective on the evolution of the efficiency of the foreign exchange market. As a typical "peripheral" country, Portugal can be used as the starting point for a study of the degree of integration of the periphery within the system. Furthermore, the Portuguese exchange also illustrates the role in practice of large players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation assumed in conventional theoretical frameworks. We also address the question of the credibility of the authorities' commitment to the standard, through the perspective of the target zone literature.

Keywords: Gold standard, Credibility, Portugal, Pre-1913

JEL Classification: F31, F33, N23

Suggested Citation

Esteves, Rui and Reis, Jaime and Ferramosca, Fabiano, Market Integration in the Golden Periphery: The Lisbon/ London Exchange, 1854-1891 (August 2007). Explorations in Economic History, Vol. 46, No. 3, 2009, Available at SSRN: https://ssrn.com/abstract=2024933 or http://dx.doi.org/10.2139/ssrn.2024933

Rui Esteves (Contact Author)

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Jaime Reis

University of Lisbon - Institute of Social Science ( email )

Av. Professor Anibal Betencourt, 9
Lisboa, 1649-004
Portugal

Fabiano Ferramosca

Universidade do Porto - Faculdade de Letras ( email )

Pra├ža de Gomes Teixeira
Oporto, 4099
Portugal

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