Equilibrium and efficiency of exchange rates in a silver-based monetary system—the cases of India and Iran

This paper examines the issue of equilibrium and efficiency of exchange rates in a silver-based monetary system during nineteenth century India and Iran. The results based on co-integration tests indicate a reliable long-run relationship between the metallic value and the exchange value of currencies in a silver-based monetary standard. Our results also validate the necessary and sufficient conditions of the efficient market hypothesis.