"Water Seeks a Level": Modeling Bimetallic Exchange Rates and the Bimetallic Band
首次构建了考虑套利成本的双本位制模型，解释了1850-1870年法国双本位制下价格比率的位置与贵金属流动性质、双本位制汇率与比率的相关性以及比率的双峰分布，表明价格比率波动是双本位制正常运作的一部分。
Arbitrage costs are usually treated as a mere footnote in formal analyses of bimetallism. At the same time, recent empirical research has demonstrated their key importance, since they produced a "bimetallic band." This paper provides the first model of bimetallism that takes this explicitly into account and uses it to explain a number of stylized features of the French bimetallic experience, 1850-1870. First, the model explains the association between the location of the price ratio within its band and the nature (either cross or joint) of specie flows. Second, it explains the correlation between bimetallic exchange rates and the bimetallic ratio. And third, it explains the two-humps distribution of the bimetallic ratio. This analysis leads to a reconsideration of bimetallism: the fluctuations of the price ratio are no longer evidence of the collapse of bimetallism, but are part of the normal functioning of a bimetallic system.