Monetary Systems and the Global Balance-of-Payments Adjustment in the Pre-Gold Standard Period, 1700-1870

27 Pages Posted: 9 Apr 2019

See all articles by Rui Esteves

Rui Esteves

Graduate Institute of International and Development Studies (IHEID)

Pilar Nogues-Marco

University of Geneva

Date Written: April 2019

Abstract

We divide this paper into four sections. The first section outlines the taxonomy of commodity-based monetary regimes in Europe and their advantages and costs. The second section describes the main international monetary flows in the Early Modern period and relates them to East-West balance-of-trade adjustments and monetary systems in Asia (1700-1800). In the third section, we turn to the development of the foreign exchange market, which was mostly based on bills of exchange in this period. We explain the expansion of bills-of-exchange market from the European to the intercontinental network in the mid-19th century. The final section then investigates how nominal exchange rates and relative prices contributed to the global current account adjustments in the near pre-gold standard period (1820s-1870s).

Keywords: Balance of Payments, Monetary Systems, Price-specie flow mechanism, Real effective exchange rates (REERs)

JEL Classification: E42, F31, N10

Suggested Citation

Esteves, Rui and Nogues-Marco, Pilar, Monetary Systems and the Global Balance-of-Payments Adjustment in the Pre-Gold Standard Period, 1700-1870 (April 2019). CEPR Discussion Paper No. DP13652. Available at SSRN: https://ssrn.com/abstract=3368150

Rui Esteves (Contact Author)

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

PO Box 136
Geneva, CH-1211
Switzerland

Pilar Nogues-Marco

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

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