Marc Flandreau, CNRS, OFCE, CEPR
Jacques Le Cacheux, OFCE, Universite de Pau et des Pays de lÕAdour

The current process of European Monetary Unification is based on a convergence scenario which assigns to countries a number of criteria which they have to meet in order to qualify for admission into the monetary union. Furthermore, the outcome of the recent Dublin ÒStability and Growth PactÓ suggests that even after the monetary union is completed (that is, once a Euro core emerges) fiscal criteria will be kept alive, in the form of a system of rules, penalties, and exception clauses. From this respect, the gradual generalization of the gold standard in Europe during the period 1880-1914 is a fascinating experience: indeed, this regime (admittedly very stable in terms of its exchange rate performance) was gradually generalized from a center comprising only a limited set of industrialized countries to the whole European area. Yet the gold zone yesterday, unlike the Euro-zone tomorrow, did not involve any agreed upon fiscal criteria, thus making its stability both intriguing and fascinating for todayÕs policy makers. This paper documents this unique experience of European convergence by drawing on an extensive research aimed at constructing a reliable data set. As such, it is the first study to provide a full account of the quantitative record of European nominal convergence 1880-1913. We find that the stability of the gold standard was a later phenomenon than commonly argues and document various hypotheses that might have accounted for this success.