The Making of a National Currency: Spatial Transaction Costs and Money Market Integration in Spain (1825–1874)

<span>This article analyzes the integration of the Spanish
money market in the nineteenth century. We use a Band-Threshold autoregression model of prices
of bills-of-exchange in ten cities to measure market convergence and efficiency
in 1825–1875. While price gaps generally decreased during the period, progress
in efficiency was concentrated in a small group of cities. We suggest that
convergence was associated to the reduction in transaction costs, which started
well before the railways through improvements in roads and postal services. By
contrast, the heterogeneous behavior of efficiency might be associated to economic
geography changes and their effects on monetary leadership.</span>

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