## Exchange Rates in the Periphery and International Adjustment Under the Gold Standard

_IMF Working Papers, February 1, 2003_

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## Bibliographic details
- Authors: Luis Catão, Solomos Solomou
- Published: February 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846126.001

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### Summary and main conclusion
- The role of exchange rate flexibility in the periphery of the gold standard has been grossly overlooked.
- The paper builds a new dataset on trade-weighed exchange rates for the period 1870-1913.
- Large currency movements in periphery countries operating inconvertible paper-money and silver-standard regimes induced major fluctuations in effective exchange rates worldwide.
- Such currency fluctuations had powerful effects on trade flows.
- Conclusion: Nominal exchange rate flexibility in the periphery was an important ingredient of international payments adjustment under the gold standard.

### Data and methodology
- New dataset: trade-weighed exchange rates covering the period 1870-1913.
- Focus on periphery countries operating inconvertible paper-money and silver-standard regimes.
- Analysis relates exchange rate movements to the international trade structure of the time.

### Findings on exchange-rate behavior and international effects
- Periphery currency movements produced major fluctuations in effective exchange rates worldwide.
- These fluctuations are linked to the structure of international trade during 1870-1913.
- Currency fluctuations in the periphery had powerful effects on trade flows, implying significant external adjustment channels beyond gold-standard center behavior.

### Policy implications and interpretation
- Nominal exchange rate flexibility outside the gold-standard core mattered for global adjustment mechanisms.
- Recognition of periphery exchange-rate variability alters how international payments adjustment under the gold standard is understood; peripheral nominal flexibility should be treated as an important component of adjustment dynamics.

### Publication and bibliographic specifics
- Authors: Luis Catão, Solomos Solomou
- Date: February 1, 2003
- Series: IMF Working Papers, Working Paper No. 2003/041
- Volume: 2003
- Issue: 041
- Pages: 37
- DOI: https://doi.org/10.5089/9781451846126.001
- Stock No: WPIEA0412003
- ISBN: 9781451846126
- ISSN: 1018-5941

*Source: IMF Working Papers landing page for "Exchange Rates in the Periphery and International Adjustment Under the Gold Standard".*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-rates-in-the-periphery-and-international-adjustment-under-the-gold-standard-16314_