Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era

López-Córdova, J. Ernesto; Meissner, Christopher M.

doi:10.1257/000282803321455331

Cited by 166 publications

(103 citation statements)

References 10 publications

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“…The estimated effect of the currency-union dummy variable is larger if we adopt Rose's more restrictive definition of a currency union. 29 More interestingly, the estimated effects of currency union on bilateral trade become larger when we estimate by instrumental variables, using the instrument discussed before. As shown in Table 10, the estimated coefficient on the currency-union dummy variable becomes 1.56 (0.44) when country fixed effects are 27 See the bottom of Table 10 for the list of independent variables.…”

Section: The Effects Of Currency Unions: New Resultsmentioning

confidence: 90%

Optimal Currency Areas

Alesina¹,

Barro²,

Tenreyro³

2002

195

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As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements. AbstractAs the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.

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Section: The Effects Of Currency Unions: New Resultsmentioning

confidence: 90%

Optimal Currency Areas

Alesina¹,

Barro²,

Tenreyro³

2002

195

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“…In this respect we follow closely the work of Eichengreen and Irwin (1995), Irwin and Terviö (2002), Estevadeordal, Frantz, and Taylor (2003), Lopez-Cordova and Meissner (2003), Jacks, Meissner, and Novy (2010) and others who have employed gravity models to analyze historical bilateral trade ‡ows. Yet, in contrast to most existing contributions, we estimate our gravity speci…cation combining non-PPP-adjusted bilateral trade data with our estimated non-PPP-adjusted income data instead of PPP-adjusted ones.…”

Section: Introductionmentioning

confidence: 93%

“…3 Following the language of the international comparison literature, we will often use the term "real" to refer to PPP-adjusted measures and the term "nominal" to non-PPP-adjusted ones. 4 Examples of cases were nominal trade data were combined with real income data can be found in Estevadeordal, Frantz, and Taylor (2003), Lopez-Cordova and Meissner (2003) and Jacks, Meissner, and Novy (2011).…”

Section: Introductionmentioning

confidence: 99%

Reassessing the Evolution of World Trade, 1870-1949

Klasing

Milionis

2012

SSRN Journal

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The typical narrative regarding the evolution of world trade prior to World War II refers to a secular rise that started around 1870 and a subsequent collapse that began in 1914. This narrative, though, is based on measures of trade openness that do not fully take into account purchasing power di¤erences across countries, as in the literature non-PPPadjusted trade data are typically denominated by PPP-adjusted GDP data. The present paper seeks to resolve this inconsistency by constructing new trade share estimates for 51 countries spanning the period from 1870 to 1949 by combining historical import and export data with non-PPP-adjusted GDP values that we estimate via the "short-cut" method. Our estimates indicate a much more pronounced rise and fall of world trade over this period with trade shares being on average 32% higher than previously documented and the world's level of openness to trade in 1913 being comparable to that in 1974. In addition, performing a similar correction for purchasing power di¤erences in the context of standard gravity regressions for the 1870-1939 period we …nd that the existing literature has overestimated the importance of income movements during this period relative to tari¤s changes and the evolution of the gold standard.

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“…The strongest case for this is that it dampens incentives for private actors to engage in welfare-improving cross-border (or cross-currency) trade, investments, and payments. Certainly there is plenty of evidence that currency stability encourages international economic exchange (for example, López-Córdova andMeissner 2003, andRose 2000); and this in turn implies that the world would be better off were volatility reduced. There are at least a couple of problems with this.…”

Section: The Problem: Exchange Rate Externalitiesmentioning

confidence: 99%

Global Governance of Global Monetary Relations: Rationale and Feasibility

Frieden

2009

Economics

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Is there a valid argument for international cooperation, and some form of international governance structure, in the international monetary realm? On the purely economic front, the argument is not strong. Yet a broader political economy approach concludes that national currency policy can in fact impose non-pecuniary externalities on partner nations. This is especially the case with major policy-driven misalignments, which cannot easily be countered by other governments. For example, one country's substantially depreciated currency can provoke powerful protectionist pressures in its trading partners, so that exchange rate policy spills over into trade policy in potentially damaging ways. Inasmuch as one government's policies create these sorts of costs for other countries, and for the world economy as a whole, there is a case for global governance. This might include some institutionalized mechanism to monitor and publicize substantial currency misalignments. While there appears to be little global political attention to such a mechanism now, there have been initiatives along these lines at the regional level, and the current crisis may have stimulated more general stirrings of interest.Special issue "Global Governance-Challenges and Proposals for Reform" Published as Policy Paper JEL: F42, F55, H87

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Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era

Cited by 166 publications

References 10 publications

Optimal Currency Areas

Optimal Currency Areas

Reassessing the Evolution of World Trade, 1870-1949

Global Governance of Global Monetary Relations: Rationale and Feasibility

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