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Market Integration in the Golden Periphery,The Lisbon/London Exchange, 1854-1891

Rui Esteves and Jaime Reis

No 338, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: The existence of a self-regulating arbitrage mechanism under the gold standard has been traditionally considered as one of its main advantages, and attracted a corresponding research interest. This research is arguably relevant not only to test for the efficiency of the gold points, but also to study the evolution of financial integration during the so-called first era of globalization. Our first aim with this paper is to contribute to the enlargement of the scope of the literature by considering the case of Portugal that adhered to the system, in 1854, at a much earlier phase than the majority of countries, thus allowing for a broader perspective on the evolution of the efficiency of the foreign exchange market. As a typical peripheral country, Portugal can be used as the starting point for a study of the degree of integration of the periphery within the system. Furthermore, the Portuguese exchange also illustrates the role in practice of large players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation assumed in conventional theoretical frameworks. We also address the question of the credibility of the authorities` commitment to the standard, through the perspective of the target zone literature.

Keywords: Gold Standard; Credibility; Portugal; Pre-1913 (search for similar items in EconPapers)
JEL-codes: F31 F33 N23 (search for similar items in EconPapers)
Date: 2007-08-01
New Economics Papers: this item is included in nep-his, nep-ifn and nep-mon
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Related works:
Journal Article: Market Integration in the Golden Periphery. The Lisbon/London Exchange, 1854-1891 (2009) Downloads
Working Paper: Market Integration in the Golden Periphery - the Lisbon/London Exchange, 1854-1891 (2005) Downloads
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