Contractionary Devaluation Risk: Evidence from the Free Silver Movement, 1878-1900

• 成果类型: Article
• 署名作者: Weiss, Colin
• 署名单位: Federal Reserve System - USA
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_00841
• 发表日期: 2020-10
• 页码: 705-720
• 关键词: expectations; dollar; FIRMS

摘要

I identify significant effects of devaluation risk on interest rates and output using US silver coinage policy news between 1878 and 1900 as clean shocks to exchange rate expectations. The Free Silver movement heightened fears the United States would abandon the gold standard and depreciate the dollar. Because Congress, rather than a central bank, set silver coinage policy, silver policy news was likely uncorrelated with economic shocks. Corporate bonds exposed to dollar devaluation returned an additional 1 percent relative to safer bonds when silver risk decreased. Additionally, increased silver coinage risk is associated with an economically significant fall in industrial production.