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

February 1, 2003

Preview Citation

Format: Chicago

Luis Catão, and Solomos Solomou. Exchange Rates in the Periphery and International Adjustment Under the Gold Standard, (USA: International Monetary Fund, 2003) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The role of exchange rate flexibility in the periphery of the gold standard has been grossly overlooked. This paper builds a new dataset on trade-weighed exchange rates for the period 1870-1913 and finds that large currency movements in periphery countries operating inconvertible paper-money and silver-standard regimes induced major fluctuations in effective exchange rates worldwide. We relate the phenomenon to the international trade structure at the time and show that such currency fluctuations had powerful effects on trade flows. We conclude that nominal exchange rate flexibility in the periphery was an important ingredient of international payments adjustment under the gold standard.

Subject: Commodities, Exchange rates, Foreign exchange, Gold, Nominal effective exchange rate, Real effective exchange rates, Real exchange rates

Keywords: Countries Mexico, EC coefficient, Elasticity of the trade balance, Exchange rate, Exchange rate adjustments in the periphery, Exchange rate movement, Exchange rate peg, Exchange rates, Fluctuations in the periphery, Gold, Gold standard, Gold standard periphery, Income elasticity, International trade, Nominal effective exchange rate, Real effective exchange rates, Real exchange rates, REER elasticity, Silver standard, Silver-standard regime, South America, Trended appreciation, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/041
Stock No:

WPIEA0412003
ISBN:

9781451846126
ISSN:

1018-5941

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