Competing Bimetallic Ratios: Amsterdam, London and Bullion Arbitrage in the Mid-18th Century

39 Pages Posted: 1 Feb 2013

Date Written: January 2013

Abstract

This article analyzes the stability of bimetallism for countries operating in integrated bullion markets who enact different legal ratios. I articulate a new theoretical framework to demonstrate that two countries can both be bimetallic only if they coordinate their legal ratios. The theoretical framework is applied to the mid-18th century when London’s legal ratio was 3.8% higher than that of Amsterdam. I find that Amsterdam was effectively on the bimetallic standard, whereas London was on a de facto gold standard.

Keywords: arbitrage, bimetallic stability, bullion market integration, melting-minting points, monetary policy, specie-point mechanism

JEL Classification: E42, F15, N13, N23

Suggested Citation

Nogues-Marco, Pilar, Competing Bimetallic Ratios: Amsterdam, London and Bullion Arbitrage in the Mid-18th Century (January 2013). CEPR Discussion Paper No. DP9300, Available at SSRN: https://ssrn.com/abstract=2210271

Pilar Nogues-Marco (Contact Author)

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

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