Equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928-1935

Tai-kuang Ho (), Cheng-chung Lai () and Joshua Jr-shiang Gau ()
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Tai-kuang Ho: Department of Quantitative Finance, National Tsing Hua University, No. 101, Section 2, Kuang-Fu Road, Hsinchu, 30013, Taiwan
Cheng-chung Lai: Department of Economics, National Tsing Hua University, Hsinchu, 30013, Taiwan
Joshua Jr-shiang Gau: Directorate-General of Budget, Accounting and Statistics, Taipei, 100, Taiwan

Cliometrica, Journal of Historical Economics and Econometric History, 2013, vol. 7, issue 1, 87-98

Abstract: We examine the equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928–1935. We find a robust long-run relationship between the Chinese dollar exchange rate and the metallic value of the Chinese dollar. The deviation from the equilibrium is short-lived and is quickly eliminated by arbitrage activities. We also find that governmental measures to limit free silver flows can disrupt this equilibrium relationship.

Keywords: Silver standard; Chinese economy; Cointegration (search for similar items in EconPapers)
JEL-codes: C32 E42 N15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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