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The making of a national currency: Spatial transaction costs and money market integration in Spain (1825–1874)

Authors
Herranz-Loncán, Alfonso
Aslanidis, Nektarios
Published in Journal of Economic History. 2019, vol. 79, no. 4
Abstract This article analyzes the integration of the Spanish money market in the nineteenth century. We use a Band-Threshold Autoregression model of prices of bills-of-exchange in ten cities to measure market convergence and efficiency in 1825–1875. While price gaps generally decreased during the period, progress in efficiency was limited to a small group of cities. We suggest that convergence was associated to the reduction in transaction costs, which started well before the railways through improvements in roads and postal services. By contrast, the heterogeneous behavior of efficiency might be associated to economic geography changes and their effects on monetary leadership.
Keywords Bills of ExchangeFinancial DevelopmentMoney Market ConvergenceMoney Market EfficiencyMoney Market IntegrationSpanish National CurrencySpecie-Point MechanismTransaction Costs
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NOGUES-MARCO, Pilar, HERRANZ-LONCÁN, Alfonso, ASLANIDIS, Nektarios. The making of a national currency: Spatial transaction costs and money market integration in Spain (1825–1874). In: The Journal of Economic History, 2019, vol. 79, n° 4. doi: 10.1017/S0022050719000561 https://archive-ouverte.unige.ch/unige:124102

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Deposited on : 2019-10-09

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