We examine the equilibrium and adjustment of exchange rates in the Chinese silver standard economy, 1928–1935. We find a robust long-run relationship between the Chinese dollar exchange rate and the metallic value of the Chinese dollar. The deviation from the equilibrium is short-lived and is...

We show how the silver standard transmitted world silver price fluctuations into China and made the Chinese price level closely linked to the world silver price. Inflation was transmitted between 1929 and 1931 when the world silver price was falling; while deflation was transmitted during 1932...