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- Title
Gold, silver, and the glorious revolution: Arbitrage between bills of exchange and bullion.
- Authors
Quinn, Stephen
- Abstract
The article presents information on the market behavior consistent with arbitrage between bills and bullion that marks a degree of international market integration during the late seventeenth century which has been statistically verified only for the eighteenth century. England's monetary system between 1688 and 1700 suffered a deep crisis. Coins were clipped and silver was exported. The price of gold coins increased by 40 per cent while the value of the pound collapsed on the international exchanges. These conditions resulted from a process of arbitrage between bills of exchange and bullion following the exogenous shock of financing England's entry into the Nine Years War in 1689. Arbitrage between bills of exchange and bullion rather than arbitrage between gold and silver formed a mechanism whereby shocks to international exchange rates were transmitted to England's monetary stock. A result of arbitrage between bills and bullion was an international flow of one metal with no offsetting flow of the other. International bills of exchange were orders to pay denominated in foreign money and payable in a foreign
- Subjects
ENGLAND; INTERNATIONAL economic relations; MONETARY systems; MONEY; ARBITRAGE; PRECIOUS metals; FOREIGN exchange
- Publication
Economic History Review, 1996, Vol 49, Issue 3, p473
- ISSN
0013-0117
- Publication type
Article
- DOI
10.2307/2597760