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International Reserves Crises, Monetary Integration, And The Payments System During The International Gold Standard

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  • HERNÁNDEZ-VERME, PAULA

Abstract

I model an international payments system with a financial center and periphery to reproduce various aspects of the International Gold Standard. This period was characterized by frequent crises associated with scarce stocks of reserves, high short-term interest rates with subsequent gold inflows, and transmission of output contractions across countries. I find that a common international currency and no legal restrictions on exchange help the periphery share reserves with the financial center, improving the world's welfare and mitigating output losses due to reserve crises. Also, the center has incentives for restrictive rediscounting while the periphery has motives for developing central banking.

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  • Hernández-Verme, Paula, 2005. "International Reserves Crises, Monetary Integration, And The Payments System During The International Gold Standard," Macroeconomic Dynamics, Cambridge University Press, vol. 9(4), pages 516-541, September.
    • Handle: RePEc:cup:macdyn:v:9:y:2005:i:04:p:516-541_04
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    Cited by:

    1. Paula Lourdes Hernandez-Verme, 2015. "Credit Chains and Mortgage Crises," Review of Development Economics, Wiley Blackwell, vol. 19(2), pages 265-281, May.
    2. James Chapman, 2008. "Policy Coordination in an International Payment System," Staff Working Papers 08-17, Bank of Canada.

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