Pegxit Pressure: Evidence from the Classical Gold Standard / Kris James Mitchener, Gonçalo Pina.

Format:

Book

Author/Creator:

Mitchener, Kris James.

Contributor:

National Bureau of Economic Research.

Pina, Gonçalo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22844.

NBER working paper series no. w22844

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Pegxit Pressure

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We develop a simple model that highlights the costs and benefits of fixed exchange rates as they relate to trade, and show that negative export-price shocks reduce fiscal revenue and increase the likelihood of an expected currency devaluation. Using a new high-frequency data set on commodity-price movements from the classical gold standard era, we then show that the model's main prediction holds even for the canonical example of hard pegs. We identify a negative causal relationship between export-price shocks and currency-risk premia in emerging market economies, indicating that negative export-price shocks increased the probability that countries abandoned their pegs.

Notes:

Print version record

November 2016.