Essays in Economic History: Purchasing Power Parity, Standard of Living, and Monetary Standards

Preface
References
Previous Books of Lawrence H. Officer
Contents
List of Figures
List of Tables
Part I Purchasing Power Parity: Origin and Use
1 Salamancans and Gerard Malynes
1.1 Salamanca School, Tudor Period
1.1.1 Salamanca School
1.1.2 Tudor Period
Notes
References
1.2 Malynes, Gerard De (fl. 1586–1623)
Selected Works of Malynes
References
2 Gustav Cassel
2.1 From Salamancans/Malynes to Cassel
2.2 The Impact of Cassel
2.3 Motivation for Cassel's PPP Theory
2.4 Quantity Theory of Money
2.5 Price-Level Concept
2.6 Absolute-PPP Theory
2.7 Relative-PPP Theory
2.8 Digression: Error Term in PPP Theory
2.9 Flexibility of PPP
2.10 Policy Implications
Notes
References
3 Purchasing Power Parity in Economic History
3.1 Introduction
3.2 Categorization of Purchasing-Power-Parity Theories
3.3 Historical Application of PPP: Premodern Periods
3.3.1 Ancient Period
3.3.2 Medieval Period
3.3.3 Sixteenth-Century Spain
3.4 Techniques of Testing PPP Theory in Economic-History Literature
3.4.1 Comparative-Static Computation
3.4.2 Regression Analysis
3.4.3 Testing for Causality
3.4.4 Nonstationarity and Spurious Regression
3.4.5 Testing for Stationarity
3.4.6 Cointegration Analysis
3.5 Price Variable in PPP Computations
3.6 Modern Period: Testing of PPP
3.6.1 Early North America
3.6.2 Bullionist Periods
3.6.3 Floating Rates—Second-Half of Nineteenth Century
3.6.4 Classic Metallic Standards
3.6.5 World War I
3.6.6 Floating Rates—1920s
3.6.7 1930s
3.6.8 Interwar Period
3.6.9 Spain—Long Term
3.6.10 Guatelmala—Long Term
3.7 Analysis of U.S. Return to Gold Standard in 1879
3.8 Establishment and Assessment of a Fixed Exchange Rate in Interwar Period
3.8.1 United Kingdom
3.8.2 France
3.9 Conclusions
Notes
References
4 Afterword to Part I
4.1 Salamancans and Gerard Malynes (Chapter 1)
4.2 Gustav Cassel (Chapter 2)
4.3 Other Studies (Chapter 3 Extended)
Notes
References
Part II Purchasing Power Parity: Empirical Studies
5 Absolute and Relative Purchasing Power Parity
5.1 The Relationship Between Absolute and Relative Purchasing Power Parity
5.1.1 Proof That the Restated PPP Theory Is Not a Truism
5.1.2 Alternative Price-Level Concepts of PPP
5.1.3 Empirical Analysis of the Strong PPP and Naive Models
5.1.4 Empirical Analysis of the Weak PPP and Naive Models
Appendix: The Data
Absolute PPP
GDP Deflator
Consumer Price Index
Notes
References
6 Law of One Price
6.1 The Law of One Price Cannot Be Rejected: Two Tests Based on the Tradable/Nontradable Price Ratio
6.1.1 Introduction
6.1.2 Law of One Price
6.1.3 Critique of Empirical Literature
6.1.4 A Model of PPP and the Tradable/Nontradable Price Ratio
6.1.4.1 Derivation of PPP/Exchange-Rate Relationship
6.1.4.2 Generation of Estimable Equation
6.1.4.3 Limitations of PPP Concept
6.1.5 The Sample
6.1.5.1 Selection of PPP Measure
6.1.5.2 Selection of PN/PT Measure
6.1.5.3 Selection of Sample
6.1.6 Test of Equality of Prices of Tradables and Nontradables
6.1.6.1 Estimation Technique
6.1.6.2 Estimation of Equation (6.5)
6.1.6.3 Performance of Equation Outside of Sample
6.1.7 Test of Equality of Prices of Tradables Across Countries
6.1.7.1 Motivation of Test Procedure
6.1.7.2 Alternative Methods of Predicting PPP/R
6.1.7.3 Comparison with Naive Model
6.1.8 Validity of Tradable/Nontradable Distinction
6.1.9 Concluding Comments
Appendix: The Data
Notes
References
7 National Price Level
7.1 The National Price Level: Theory and Estimation
7.1.1 Conventional Approach to the National Price Level
7.1.2 The Various PPP Indexes
7.1.3 Issues of Theory and Estimation
7.1.4 Econometric Approximation of PL-P Analytical Relationship
7.1.5 Explanatory Variables for the Nontradable/Tradable Price-Level Ratio and the National Price Level
7.1.6 Alternative Estimators of the National Price Level
7.1.7 Relative Importance of Determinants of the National Price Level
7.1.8 Principal Conclusions
Appendix: The Data
Notes
References
8 Afterword to Part II
8.1 Absolute and Relative PPP (Chapter 5)
8.2 Law of One Price (Chapter 6)
8.3 National Price Level (Chapter 7)
Notes
References
Part III Standard of Living
9 Terms of Trade
9.1 Prelude
9.1.1 New Historical Balance of Payments
9.1.2 Openness of Economy
9.1.3 Goods-Versus-Services Economy
9.2 Construction of Series
9.2.1 Method
9.2.2 Goods
9.2.3 Services
9.2.3.1 Transportation
9.2.3.2 Travel
9.2.3.3 Passenger-Ship Revenue
9.2.3.4 Financial Transactions
9.2.3.5 Military Expenditures Abroad
9.2.3.6 Non-Imported Slave Purchases
9.3 Interpretation
Notes
References
10 Consumer Price Index
10.1 Foreign Travel in United States
10.1.1 Food
10.1.2 Alcohol
10.1.3 Rent
10.1.4 Transportation
10.1.5 Total Index
Notes
References
10.2 The Cost of Living in America: A Political History of Economic Statistics, 1880–2000
11 Compensation of Manufacturing Workers
11.1 Nominal Compensation, Real Compensation, and Standard of Living
11.1.1 Compensation and Its Components
11.1.2 Standard of Living: Alternative Measures
11.1.3 Standard of Living: Comparison with Other Studies
11.1.4 Concluding Comments
References
12 Afterword to Part III
12.1 Relationship to MeasuringWorth
12.2 Terms of Trade (Chapter 9)
12.3 Value of Consumer Bundle
12.4 Consumer Price Index (Chapter 10)
12.5 Compensation of Manufacturing Workers (Chapter 11)
12.5.1 Reception
12.5.2 Data Series
Notes
References
Part IV Fixed-Rate Monetary Standards
13 Metallic Standards
13.1 Gold Standard
13.1.1 Types of Gold Standard
13.1.2 Countries on the Classical Gold Standard
13.1.3 Elements of Instability in Classical Gold Standard
13.1.4 Automatic Force for Stability: Price Specie-Flow Mechanism
13.1.5 Rules of the Game
13.1.6 Reason for Stability: Credible Commitment to Convertibility
13.1.7 Implications of Credible Commitment
13.1.8 Government Policies that Enhanced Stability
13.1.9 Experience of Periphery
13.1.10 Breakdown of Classical Gold Standard
13.1.11 Return to the Gold Standard
13.1.12 Instability of Interwar Gold Standard
13.1.13 Breakdown of Interwar Gold Standard
References
13.2 Silver Standard
13.2.1 Definition of Silver Standard
13.2.2 Countries on Silver Standard to 1870
13.2.3 Asian Abandonment of Silver Standard Prior to World War I
13.2.4 Termination of Silver Standard
References
13.3 Bimetallism
13.3.1 The Nature of Bimetallism
13.3.2 Advantages and Disadvantages of Bimetallism
13.3.3 Theories of Bimetallic Stabilization
13.3.4 Bimetallism Prior to the 19th Century
13.3.5 Bimetallic France in the 19th Century
References
14 Classical Gold Standard
14.1 International Monetary Regimes: The Gold Standard
14.1.1 Introduction
14.1.2 Countries on Gold Standard
14.1.2.1 Legal Versus Effective Monetary Standard
14.1.2.2 Center Country
14.1.2.3 Other Core Countries
14.1.2.4 Periphery
14.1.2.5 Why the Scramble to Gold?
14.1.3 Characteristics of Gold Standard
14.1.3.1 Domestic Gold Standard
14.1.3.2 International Gold Standard
14.1.4 Implications for Money Supply and Automatic Correctives
14.1.4.1 Traditional Mechanism
14.1.4.2 Monetary Mechanism
14.1.5 Sources of Instability of the Gold Standard
14.1.6 Rules of the Game
14.1.6.1 The Rules
14.1.6.2 Discount-Rate Rule
14.1.6.3 Sterilization Was Dominant
14.1.6.4 Was the Bank of England Supreme?
14.1.7 Stability of Gold Standard
14.1.7.1 Private-Sector Credibility in Convertibility
14.1.7.2 Reasons Why Commitment to Convertibility Was so Credible
14.1.7.3 Rareness of Violations of Gold Points
14.1.7.4 Stabilizing Speculation
14.1.7.5 Government Policies that Enhanced Gold-Standard Stability
14.1.8 Experience of Periphery
14.1.9 Performance
14.1.10 Breakdown of Gold Standard
References
15 Bretton Woods System
15.1 A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform
16 Afterword to Part IV
16.1 Metallic Standards (Chapter 13)
16.2 Classical Gold Standard (Chapter 14)
16.3 Interwar Gold Standard (Chapter 13)
16.4 Silver Standard, Bimetallism (Chapter 13)
16.5 Bretton Woods System (Chapter 15)
16.6 Further Discussion
Notes
References
Part V Anglo-American Monetary Standards
17 American Monetary Standard
17.1 Unit of Account
17.2 Metallic Content of the Dollar and Coinage Denominations
17.3 Legal-Tender Status of Coin
17.4 Convertibility of Government/Central-Bank Paper into Coin
17.5 Nature of Coinage
17.6 Provision of Bars
17.7 Convertibility of Banknotes and Bank Deposits
17.8 Legal Versus Effective Monetary Standards
17.9 Paper Standards
Notes
References
18 British Monetary Standard
18.1 Unit of Account
18.2 Mint Price and Coins Struck
18.3 Legal-Tender Status of Coin
18.4 Convertibility of Government/Central-Bank Paper into Coin
18.5 Nature of Coinage
18.6 Bank Provision of Bars and Foreign-Exchange Dealings
18.7 Convertibility of Banknotes and Bank Deposits
18.8 Legal Versus Effective Metallic Standards
18.9 Paper Standards
Notes
References
19 Afterword to Part V
Notes
References
Part VI Monetary-Standard Behavior
20 Bullionist Periods
20.1 Bullionist Controversies (Empirical Evidence)
20.1.1 History of Bullionist Periods
20.1.2 Bullionist, Anti-Bullionist, and Country-Bank Models
20.1.3 Extension to Country Banks
20.1.4 Empirical Studies: Visual Comparison of Movements of Variables
20.1.5 Empirical Studies: Time-Series Analysis
References
21 Dollar-Sterling Exchange Market
21.1 Empirical Testing of Market Efficiency
21.1.1 Unit of Observation
21.1.2 Sample Periods
21.1.3 Gold-Point Arbitrage
21.1.3.1 Conventional Wisdom and Empirical Studies
21.1.3.2 Empirical Testing
21.2 Net Outcome
21.2.1 Methodology of Measuring Regime Efficiency
21.2.1.1 Determinants of Regime Efficiency
21.2.1.2 A Simple Measure of Efficiency
21.2.1.3 A Model of Measurement of Efficiency
21.2.2 Empirical Results
Notes
References
22 U.S. Specie Standard
22.1 The U.S. Specie Standard, 1792-1932: Some Monetarist Arithmetic
22.1.1 Methodology of the Historical Monetary Base
22.1.2 Were the First and Second Banks Central Banks?
22.1.3 Delineation of Subperiods
22.1.4 The New Monetary Base, 1789–1932: Construction
22.1.4.1 Structure
22.1.4.2 Comparison with Other Historical Monetary-Base Series
22.1.4.3 Components of Net-Liabilities Composition of the Monetary Base
22.1.5 The New Monetary Base, 1789–1932: Presentation
22.1.5.1 Net-Liabilities Breakdown
22.1.5.2 Assets Breakdown
22.1.6 The New Monetary Base Versus Predecessors
22.1.7 The Monetary Balance of Payments, 1790–1932
22.1.8 Comparative Economic Performance of Subperiods
22.1.8.1 Exchange-Market-Pressure Model
22.1.8.2 Monetary Pyramiding Ratios
22.1.8.3 Price and Income Behavior
22.1.8.4 Comparison with Existing Literature
22.1.9 Conclusions
Appendix
Data Sources and Construction of Variables
Specie Stock
Notes
References
23 Afterword to Part VI
23.1 Bullionist Periods (Chapter 20)
23.2 Dollar-Sterling Exchange Market (Chapter 21)
23.2.1 Reception
23.2.2 Data Series
23.2.2.1 Parity
23.2.2.2 Exchange Rate
23.2.2.3 Gold Points
23.2.3 Exchange-Market Integration
23.2.4 Market and Regime Efficiency
23.2.5 Criticisms
23.3 U.S. Specie Standard (Chapter 22)
Notes
References
Part VII Economics in Alternative Scenarios
24 Economics and Economic History in Science Fiction
24.1 What Is Science Fiction?
24.2 Technology
24.2.1 Space Travel
24.2.2 Medical Advances
24.2.3 Robotics and Materials
24.2.4 Communication
24.3 Labor
24.3.1 Labor Force Participation
24.3.2 Population Growth
24.3.3 Specialization
24.4 Assets and Capital
24.4.1 Consumption and Inflation
24.4.2 Cash and Debt
24.4.3 Value of Property
24.4.4 Resources
24.4.5 Productivity
24.5 Trade
24.5.1 Monetary System
24.5.2 Commerce
24.5.3 Principal-Agent Problem
24.5.4 Intellectual Property
24.6 Government
24.6.1 Central Planning
24.6.2 Property Law
24.6.3 Capitalism, Socialism, and Communism
24.7 Alternate History
24.7.1 Economic Cost (and Benefit) of War
24.7.2 Historical Impact of Government
24.7.3 Parallel Worlds
24.7.4 History Repeated in the Future
24.8 Why Science Fiction Matters
Notes
References
Index of Names
Index of Subjects