Macroeconomic trade effects of vehicle currencies: Evidence from 19th century China

Arbeitspapier

We use the Chinese experience between 1867 and 1910 to illustrate how the volatility of vehicle currencies affects trade. Today's widespread vehicle currency is the dollar. However, the macroeconomic effects of this use of the dollar have rarely been addressed. This is partly due to identification problems caused by its international importance. China had adopted a system, where silver was used almost exclusively for trade, similar to a vehicle currency. While being important for China, the global role of silver was marginal, alleviating said identification problems. We develop a bias corrected structural VAR showing that silver price fluctuations significantly affected trade.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 23/2016

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Empirical Studies of Trade ; Foreign Exchange ; Open Economy Macroeconomics ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Asia including Middle East
• Subject: vehicle currency ; China ; SVAR ; small sample

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): El-Shagi, Makram ; Zhang, Lin
• Event: Veröffentlichung
• (who): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (where): Halle (Saale)
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/142801
• URN: urn:nbn:de:gbv:3:2-59308
• Last update: 10.03.2025, 11:43 AM CET