Using a Markov-switching GARCH model this paper analyzes the volatility evolution of the greenback's price in gold from after the Civil War until the return to gold convertibility in 1879. The econometric inference associated with our methodology indicates a switch to a regime of low volatility roughly seven months before the actual resumption. Since this empirical finding is most likely to be reconciled with a change in market expectations, we conclude that expectations affected the exchange rate more than fundamentals. Our analysis also demonstrates that regime switches in the volatility of exchange rates may reflect historical events that remain undiscovered otherwise. In this paper we study the period between the end of the American Civil War and the return to gold in 1879 and contribute to the theoretical debate on the factors that may drive exchange rates. In the literature covering this debate two opposing opinions predominate. On the one hand, monetarists like Friedman and Schwartz (1963) argue that exogenous macroeconomic fundamentals like money supplies, price inflation and price parities cause the high premiums on gold. This view is supported, inter alia, by Kindahl (1961), andOfficer (1981). On the other hand, Calomiris (1992;1988;1985) strongly opposes this view by stating that expectations are more important to the greenback exchange rate than the classical fundamentals (like money supplies). Consequently, Calomiris supports the research pursued, among others, by Mitchell (1903) and Willard et al. (1996) who attempt to incorporate news and significant events in their study of the greenback markets.However, besides these opposing views other authors (e.g. Smith and Smith, 1997) argue that both expectations and macroeconomic fundamentals did play a role in the evolution of the greenback exchange rate. More explicitly our methodology helps us to identify distinct phases (regimes) of high and low exchange-rate volatility. Since such distinct exchange-rate volatility regimes can easily be reconciled with market participants' expectations on future changes in the exchange rate (rather than with changes in fundamentals), we interpret our results as empirical evidence that agents had anticipated the exchange-rate fixing associated with the return to the gold standard beforehand.In particular, our econometric analysis detects a regime switch from high to low exchange-rate volatility several months before the actual resumption thus supporting Calomiris' view that expectations may have mattered more than macroeconomic fundamentals. Our econometric technique also provides a new means of gauging the Civil War and the postbellum period. Initially, from a financial investor's perspective, our results reflect the considerable political uncertainty that characterized the postbellum years. However, the switch to a low volatility regime long before the actual resumption date demonstrates that policy makers were surprisingly able to commit to their announced resumption plan. This paper contains 6 sections. In...
Based on unique data from a worldwide survey among participants of international climate conferences, I investigate the acceptance of the most discussed components of architectures for an international climate agreement, namely: global quantitative targets, sector targets, research and development, geoengineering, land use, and adaptation. Regional and economic differences as well as personal attitudes play an important role for the perception of the different components. Global quantitative targets and adaptation are the most accepted in contrast to a low acceptance of geoengineering. People that are more affected by climate change and value fairness a lot care more about global and sector targets and research and development. Surprisingly, being vulnerable to climate change does not increase the preference for adaptation by much. Furthermore, I analyze which countries or groups of countries are expected to play a leading role for each component. The EU is seen as a key player and not much is expected from the USA and China. I detect a normative bias that increases expectations on China, the EU, and the USA for some of the components.
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