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

José López-Córdova () and Christopher Meissner ()

Center for International and Development Economics Research, Working Paper Series from Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley

Abstract: In this paper we show that the spread of the classical gold standard in the late nineteenth century increased international trade flows. This positive effect was compounded whenever a group of countries formed a monetary union. Applying the gravity model of trade to more than 1,100 country pairs during the 1870-1910 period, we find that two countries on gold would trade 60 percent more with each other than with countries on a different monetary standard. Moreover, a monetary union would more than double bilateral trade flows. Our findings are relevant for current discussions on alternative monetary arrangements for the twenty-first century.

Keywords: international trade; empirical; panel; currency union; exchange rate regimes; gold standard; gravity model; data; history (search for similar items in EconPapers)
Date: 2000-11-01
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Journal Article: Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era (2003) Downloads
Working Paper: Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era (2000) Downloads
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