Pegxit Pressure: Evidence from the Classical Gold Standard
Kris James Mitchener and Gonçalo Pina
Abstract
We analyze whether trade shocks put pressure on pegs to break. Using new high-frequency data on prices and export portfolios from the classical gold standard era, we identify a negative causal relationship between export-price shocks and currency-risk premia in emerging market economies. The results indicate that negative export-price shocks increased the probability that countries would abandon their pegs.
Jun 10, 2021