| The Empirics of International Currencies: (2005) | |||||||||||||
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| Using a new database for the late 19 century when the pound sterling was the leading currency, this paper provides the first empirical review of several key issues in the economics of international currencies. First, we report evidence in favor of the search theoretic models of the emergence of international currencies. Second, we give empirical support to strategic externalities. Third, we provide strong confirmation of the existence of persistence. Finally, we also reject the view that the international monetary system is subject to pure path dependency, in that it cannot remain locked into some past equilibrium. Our conclusion is that, for the late 19 century at least, money and trade were complements. The extent to which this is still true today should be the topic of future research. . Marc Flandreau is Professor of Economics and Clemens Jobst PhD candidate, Sciences Po, Paris. Address for correspondence: Chaire de Finances Internationales, Sciences Po, 27 rue Saint-Guillaume, 75007 Paris, France, email: flandreau@sciences-po.fr. The authors gratefully acknowledge financial support from the Bank of France (Fondation Banque de France). Flandreau thanks the IMF for its hospitality while writing part of this paper (April 2005). Earlier versions of this paper were presented at the Cliometric Conference, Lake Tahoe, June 2005, Stanford University, June 2005, the European Economic History Conference, Istanbul, September 2005, the EHA meetings, Toronto, September 2005, the Paris X-Nanterre macroeconomics seminar, October 2005, and the BIS seminar, November 2005. We are grateful for discussions with colleagues and comments from seminar participants. We specially thank Michel Aglietta, Mike Bordo, Claudio Borio, Barry Eichengreen, Andrew F... | |||||||||||||
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