El-Shagi, Makram / Zhang, Lin



We assess the role of silver price fluctuations in Chinese trade and GDP during the late Qing dynasty, when China still had a bimetallic (silver/copper) monetary system in which silver was mostly used for international trade. Using a structural VAR (SVAR) with blockwise recursive identification, we identify the impact of silver price shocks on the Chinese economy from 1867 - when trade data became available - to 1910, when the Qing dynasty collapsed. The series of negative silver price shocks during this period had sizable impact on both imports and exports, but only a very minor effect on the trade balance, and only marginal impact on growth. Stronger effects were mitigated by inelastic export quantities. Generally, while considerable on impact, the effect of silver price shocks is only short lived and has no persistent effects in either direction.


China, SVAR, small sample, silver price


El-Shagi, M.; Zhang. L.: Trade Effects of Silver Price Fluctuations in 19th-Century China: A Macro Approach, in: China Economic Review, Vol. 63, October 2020