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A Note on Juglar, Bonnet and the Intuition of the Interest Parity Relation

Author

Listed:
  • Claude Diebolt

    (Association Française de Cliométrie (AFC), BETA/CNRS, Université Louis Pasteur de Strasbourg & Humboldt-Universität zu Berlin.)

  • Antoine Parent

    (Association Française de Cliométrie (AFC), BETA/CNRS, UMR 7522, Université Louis Pasteur de Strasbourg.)

Abstract

It is a commonly accepted view that the parity theory of forward exchange based on the law of one price was first formulated by Keynes (1923). In this article we assess the preliminary shapes of the Interest Parity (IP) relation. After reviewing the early beginnings of the IP relation we investigate two French economists of the mid 19th century who have hitherto received no adequate attention. We argue that Bonnet (1866) and Juglar (1866) ought to be considered as pioneers in the assessment of IP relation since Goschen’s contribution (1861) is related to the specificity of "long" exchange rates at bimetallic time.

Suggested Citation

  • Claude Diebolt & Antoine Parent, 2006. "A Note on Juglar, Bonnet and the Intuition of the Interest Parity Relation," Working Papers 06-12, Association Française de Cliométrie (AFC).
    • Handle: RePEc:afc:wpaper:06-12
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    Keywords

    Interest parity; Forward Exchange Markets; Historical Economics; History of Economic Thought;
    All these keywords.

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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