An Essay on the Emergence of the International Gold Standard, 1870-80

Marc Flandreau

No 1210, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper is an exploration of the theory of endogenous regime changes which takes as an illustration the making of the classical gold standard. The international gold-based fixed exchange rate regime that surfaced during the 1870s has traditionally been interpreted as resulting from a mix of structural factors (Kindleberger (1993)), free-rider problems (Kenwood and Lougheed (1972)), transaction costs considerations (Redish (1992)), or political economy forces (Gallarotti (1990)). This paper - initially written to disentangle these various theories - argues that none of the traditionally accepted views proves sufficiently robust to closer scrutiny. We build a model of the pre-1870 international monetary system which allows us to formally test and reject the `free-rider' and `structural' views. We rely on historical and microeconomic evidence to criticize the `transaction costs' and `political economy' theories. Finally, we provide an alternative explanation of the emergence of the gold standard. Our conclusion is twofold. First, we argue that the making of the gold standard was very much the result of path-dependency and coordination problems. Second, we claim that the very process through which the gold standard was adopted played a major role in shaping its operation.

Keywords: Central Banking; Coordination; Gold Standard; International Monetary System; Regime Change (search for similar items in EconPapers)
JEL-codes: E5 N2 (search for similar items in EconPapers)
Date: 1995-07
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1210 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1210

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1210

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().