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Purchasing Power Parity Across Six British Colonies Versus Across the Same Six U.S. States, 1748-1811

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  • Farley Grubb

    (Department of Economics,University of Delaware)

Abstract

For the six major British North American colonies, five of whom independently issued their own fiat paper money, exchange rates between these colonies are constructed and combined with price indices to test purchasing power parity between these colonies. Purchasing power parity is then tested between these same six locations after they became states united politically and monetarily under a common currency with no trade barriers established by the U.S. Constitution. Even when using short spans of data and low powered tests, purchasing power parity cannot be rejected in either period, and if anything, holds with more confidence prior to political and monetary unification.

Suggested Citation

  • Farley Grubb, 2004. "Purchasing Power Parity Across Six British Colonies Versus Across the Same Six U.S. States, 1748-1811," Working Papers 04-05, University of Delaware, Department of Economics.
    • Handle: RePEc:dlw:wpaper:04-05
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    File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2004/UDWP2004-05.pdf
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    References listed on IDEAS

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    1. McGuire, Robert A., 2003. "To Form a More Perfect Union: A New Economic Interpretation of United States Constitution," OUP Catalogue, Oxford University Press, number 9780195139709.
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    Cited by:

    1. Farley W. Grubb, 2005. "State "Currencies" and the Transition to the U.S. Dollar: Reply—Including a New View from Canada," American Economic Review, American Economic Association, vol. 95(4), pages 1341-1348, September.

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    More about this item

    Keywords

    Monetary Policy;

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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