Equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928–1935

Cliometrica - Tập 7 - Trang 87-98 - 2012
Tai-kuang Ho1, Cheng-chung Lai2, Joshua Jr-shiang Gau3
1Department of Quantitative Finance, National Tsing Hua University, Hsinchu, Taiwan
2Department of Economics, National Tsing Hua University, Hsinchu, Taiwan
3Directorate-General of Budget, Accounting and Statistics, Taipei, Taiwan

Tóm tắt

We examine the equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928–1935. We find a robust long-run relationship between the Chinese dollar exchange rate and the metallic value of the Chinese dollar. The deviation from the equilibrium is short-lived and is quickly eliminated by arbitrage activities. We also find that governmental measures to limit free silver flows can disrupt this equilibrium relationship.

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