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Contents Introduction

The paper uses the panel data methodology to reassess the scholarly consensus in the economic history literature (“silver-standard myth”) that attributes Japan’s export boom of the late nineteenth century to the country’s fortuitous adoption of the silver standard. The paper, based on the annual panel data of Japanese trade flows with five gold- and five silver- standard countries for 1885–97, finds that the growth of exports was consistently higher for silver- than for gold-standard destinations (though the difference was statistically not significant), refuting the near-consensus view that the falling relative price of silver stimulated exports to gold-standard countries. This finding should be both logical and intuitive. First, given the higher rate of inflation in Japan, the yen’s real exchange rate did not depreciate during the silver-standard era. Second, Japan, as a small open economy, was a price-taker in world markets. The expansion of Japanese exports can best be understood as resulting from Japan’s increased capacity to produce goods, a surplus of which the country was able to sell at given world prices.