AMBER – ABBS Management Business and Entrepreneurship Review

Open Access Open Access  Restricted Access Subscription Access

Capital Inflows and Silver Standard in India


Affiliations
1 International Institute for Development Studies, Kolkata, India
 

In this paper author tries to relate gold and silver inflows with GDP, GDP per capita, export, import and gold silver price ratio in India during silver standard regime from 1851 to 1893. Author used semi-log, double-log regression models, Johansen co-integration and VAR models (1991,1996) and Bai-Perron model (2003) for structural change taking data from Maddison(2006) and Ambedkar(1923). The paper concludes that gold inflows during 1851-1893 had decreased at the rate of 0.34% per year insignificantly but it was nonstationary, convergent and had no structural breaks. Silver inflows during 1851-1893 had increased at the rate of 1.51% per year insignificantly and found nonstationary and convergent and had one upward structural break in 1857. No co-integration among gold or silver inflows with GDP, GDP per capita,export, import and gold silver price ratio was found during 1851-1893 where VAR model was unstable and non-stationary and impulse response functions were diverging. Semi-log linear regression model among silver inflows and gold inflows with those variables were also insignificant although GDP, export, import and gold silver price ratio had been increasing at the rates of 0.52%, 9.14%, 5.16% and 0.77% per year significantly. But double-log linear regression model suggested that gold inflows had significant impact from GDP, GDP per capita, export, and gold-silver price ratio but had no significant impact of silver inflows from those variables during 1851-1893 respectively. Yet,there is bidirectional causality among gold inflows, GDP, GDP per capita, export, import and gold silver price ratio significantly during the given period. Even, there were sharp depreciation of rupee sterling rate, falling silver price, silver production and rising gold price and gold production during the silver standard regime. Thus, gold and silver inflows could not synthesize the silver standard more effective in macro-dynamic adjustment during 1851-1893 although the series of managerial experiments of the commissions and government are equally responsible for instability of the silver standard in India which was equally identical with gold standard in England.

Keywords

Net Gold Inflows, Net Silver Inflows, Silver, Standard, GDP, Export, Import, Co-Integration, VAR.
User
Notifications
Font Size

  • Ambedkar, B.R.,1923,The problem of rupee:Its origin and solution,P.S.King & sons Ltd,London.

  • Bai, Ying & Kung, James Kai-sing., 2016, Opium, Silver and the Decline of Late Imperial China, 1789-1910, University of Hong Kong.

  • Bhowmik,Debesh, 2016,B.R.Ambedkar and Silver standard in India,paper will be presented in International seminar in Magadh University.

  • Bhowmik, Debesh., 1992-93, A profile of Dr.B.R.Ambedkar's view on the concept of Convertibility of Rupee,published in Indian Economic Association 76thConference volume-1993-94,Bombay,14-16,republished in in Debendra Kumar Das (ed)-Great Indian Economists:Their creative vision for socio-economic development,314-320,(Deep and Deep Publications,NewDelhi)

  • Bhowmik, Debesh(ed).,2016, In terna tional Monetary System:Past,Present and Future(Regal Publishers, NewDelhi)

  • Bhowmik,Debesh.,2003,Essays on International Money,Deep and Deep Publishers,NewDelhi.

  • Bordo, Michael D.& Meissner, Christopher M.,2007, Foreign Capital and Economic growth in the First Era of Globalisation,NBER.

  • Bordo, Michael David., 1981, Classical Gold Standard: Some Lessons Today, Federal Reserve Bank of St.Louis.

  • Ching, Jao Yu.,1965, The Silver Standard and China, 1911-1935, University of Hong Kong, Thesis for Master of Arts.

  • Coyajee,J.C., 1983, Development of Currency System in India, Deep and Deep Publications, NewDelhi

  • Das,Debendra Kumar.,2004, Relevance of Dr.Ambedkar's Economic Ideas on the Problems of Indian Currency:Some Observations, published in Indian Economic Association 76th Conference volume-1993-94, Bombay, 7-10, republished in Debendra Kumar Das(ed)-Great Indian Economists: Their creative vision for socio-economic development, 299-306, (Deep and Deep Publications, NewDelhi)

  • Davis,Lance E. &Gallman, Robert E., 2001, Evolving Financial Markets and International Capital Flows:Britain, the Americas and Australia 1865-1914, Cambridge University Press.

  • Fernholz, Ricardo. Mitchener, Kris James & Weidenenmier, Merc., 2013, Pulling up the Transished Anchor:The End of silver as a Global Unit of Account, www.cepr.org

  • Gault,John,2014,How does the gold price compare to other macro indicators? Chatham House Repor t Gold Taskfo rce Repor t . www.chathamhouse.org

  • Gonzalez,Rafael Dobado., Galvarriato, Aurora Gomez & Williamson, J.G.,2008, Mexican excep tionalism :Globalisa tion and industrialization, Journal of Economic History, Vol-68,No-3,September.

  • Granger, C.W.J.,1969, Investigating Causal Relations by Econometric Models and Cross-spectral Methods, Econometrica, 37(3), 424-438.

  • Jadhav,Narendra.,2005, Exchange Rate Regime and Capital Flows:The Indian experience, Chief Economis ts ' Workshop , April4-6 ,Bank of England.

  • Johansen,S., 1988,Statistical Analysis of Co-integrating Vectors. Journal of Economic Dynamics and Control, Vol. 12, 231-254.

  • . . .,1991, Estimation of Hypothesis Testing of Co-integration Vectors in Gaussian Vector Autoregressive Models, Econometrica 59,Nov,1551-80

  • . . ..,1994,The role of the constant and linear terms in co-integration analysis of nons ta tionar y variables . Econometric Reviews,13,205-229

  • Johansen, S., 1995, Likelihood-Based Inference in Co-integrated Vector Autoregressive Models. Oxford University Press.

  • . . .,1996, Likelihood-Based Inference in Co-integrated Vector Autoregressive Models, 2ndEdition,Oxford University Press.

  • . . .. & K.Juselius.,1990,Maximum likelihood estimation and co-integration with application to the demand of money. Oxford Bulletin of Economics and Statistics,Vol-52,No-2,169-210.

  • Keynes, J.M.,1913,Indian currency and finance". Macmillan and co.

  • Leavens,Dickson.H.,1939,Silver Money,Principia Press Inc,Bloomington,Indiana

  • Ma,Debin.,2012,Money and Monetary System in China in the 19-20th century:An Overview,Working Paper no-159/12,London School of Economics.

  • Maddison, A., 2006,The World Economy: Vol-1 and 2. OECD: Paris

  • . . . . ,2007, Contours of the world economy,1-2030:Essays in Macro Economic History,OUP.

  • O 'Connor,F.A . et al.,2015 ,The Financial Economics of Gold-A Survey,International Review of Financial Analysis,41,186-205.

  • Roy, Alokananda., 2004, Ambedkar versus Keynes-On Indian Currency:In the Light of Contemporary Relevance,published in published in Indian Economic Association 76thConference volume-1993-94,Bombay,11-13 republished in Debendra Kumar Das (ed)-Great Indian Economists:Their creative vision for socio-economic development,307-313,(Deep and Deep Publications,NewDelhi)

  • SRSrocco Report.,2015,Filed in Energy,Precious metals,Dec6,https://srsroccoreport.com

  • Velde,Francois R.& Weber,Warren E.,1998,A Model of Bimetallism,Federal Reserve Bank of Minneapolis,Research Depar tment,Working Paper-588.

  • World Gold Council,2010,The 10yr gold bull market in perspective,London,UK.

  • Zaraga,Ludovico.,2014,Effects of Exchange Rate Regimes on Trade: the Case of Silver Standard India,Northwestern University,Nov, 24.


Abstract Views: 658

PDF Views: 356




  • Capital Inflows and Silver Standard in India

Abstract Views: 658  |  PDF Views: 356

Authors

Debesh Bhowmik
International Institute for Development Studies, Kolkata, India

Abstract


In this paper author tries to relate gold and silver inflows with GDP, GDP per capita, export, import and gold silver price ratio in India during silver standard regime from 1851 to 1893. Author used semi-log, double-log regression models, Johansen co-integration and VAR models (1991,1996) and Bai-Perron model (2003) for structural change taking data from Maddison(2006) and Ambedkar(1923). The paper concludes that gold inflows during 1851-1893 had decreased at the rate of 0.34% per year insignificantly but it was nonstationary, convergent and had no structural breaks. Silver inflows during 1851-1893 had increased at the rate of 1.51% per year insignificantly and found nonstationary and convergent and had one upward structural break in 1857. No co-integration among gold or silver inflows with GDP, GDP per capita,export, import and gold silver price ratio was found during 1851-1893 where VAR model was unstable and non-stationary and impulse response functions were diverging. Semi-log linear regression model among silver inflows and gold inflows with those variables were also insignificant although GDP, export, import and gold silver price ratio had been increasing at the rates of 0.52%, 9.14%, 5.16% and 0.77% per year significantly. But double-log linear regression model suggested that gold inflows had significant impact from GDP, GDP per capita, export, and gold-silver price ratio but had no significant impact of silver inflows from those variables during 1851-1893 respectively. Yet,there is bidirectional causality among gold inflows, GDP, GDP per capita, export, import and gold silver price ratio significantly during the given period. Even, there were sharp depreciation of rupee sterling rate, falling silver price, silver production and rising gold price and gold production during the silver standard regime. Thus, gold and silver inflows could not synthesize the silver standard more effective in macro-dynamic adjustment during 1851-1893 although the series of managerial experiments of the commissions and government are equally responsible for instability of the silver standard in India which was equally identical with gold standard in England.

Keywords


Net Gold Inflows, Net Silver Inflows, Silver, Standard, GDP, Export, Import, Co-Integration, VAR.

References





DOI: https://doi.org/10.23874/amber%2F2017%2Fv8%2Fi1%2F158364