When do fixed exchange rates work? Evidence from the Gold Standard

• 成果类型: Article
• 署名作者: Chen, Yao; Ward, Felix
• 署名单位: Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2018.11.003
• 发表日期: 2019
• 页码: 158-172
• 关键词: External adjustment; Sectoral structure; migration; target zone; price rigidity; DSGE; Bayesian estimation; Real effective exchange rate

摘要

Current account reversals under the Gold Standard (1880-1913) - a fixed exchange rate regime - were accompanied by few, if any, output losses. To understand why, we build and estimate an open economy model of the Gold Standard, which allows us to quantitatively assess the importance of three channels of external adjustment: flexible prices, international migration, and monetary policy. Our first finding is that flexible prices were the most influential channel through which output was stabilized, whereas migration and monetary policy mattered little. Our second finding is that price flexibility was predicated on large primary sectors. Their flexibly priced products dominated the export booms that stabilized output during major external adjustments. (C) 2018 Elsevier B.V. All rights reserved.