Explorations in economic history : EEH, 2013, Vol.50(2), pp. 205-226
To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.eeh.2012.12.003 Byline: Matthias Morys Keywords: Gold standard; Central bank reaction function; Rules of the game; Balance-of-payments adjustment; Central banking Abstract: Drawing on a new data set of monthly observations, this paper investigates similarities and differences in the discount rate policy of 12 European countries under the Classical Gold Standard. It asks, in particular, whether the bank rate policy followed different patterns in core and peripheral countries. Based on OLS, ordered probit and pooled estimations of central bank discount rate behaviour, two main findings emerge: firstly, the discount rate decisions of core countries were motivated by a desire to keep the exchange-rate within the gold points. In stark contrast, the discount rate decisions of peripheral countries reflected changes in the domestic cover ratio. The main reason for the difference in behaviour was the limited effectiveness of the discount rate tool for peripheral countries, which resulted in more frequent gold point violations. Consequently, peripheral countries relied on high reserve levels and oriented their discount rate policy towards maintaining the reserve level. Secondly, interest rate decisions were influenced by Berlin and London to a similar degree, suggesting that the European branch of the Classical Gold Standard was less London-centred than had been hitherto assumed. In establishing general patterns of discount rate policy, this paper aims to contribute to the wider discussion on monetary policy under the gold standard and the core-periphery dichotomy. Article History: Received 19 March 2012 Article Note: (footnote) [star] I owe a special thanks to the following people for helping me collect the data: Kath Begley (Bank of England), Sofia Lazaretou (Bank of Greece), Alfredo Gigliobianco (Bank of Italy), Kalina Dimitrova (Bulgarian National Bank), Ms Beex (De Nederlandsche Bank), Ivo Maes and Arnold de Schepper (National Bank of Belgium), Virgiliu Stoenescu, Elisabeta Blejan, Brandusa Costache and Adriana Aloman (National Bank of Romania), Milan Sojic and Ljiljana Djurdjevic (National Bank of Serbia), Walter Antonowicz, Clemens Jobst, Bernhard Mussak and Thomas Scheiber (Osterreichische Nationalbank), Erik Buyst, Martin Ivanov, Jan Tore Klovland, Larry Neal, Giuseppe Tattara, Anders Ogren, Lars Fredrik Oksendal and Marc Weidenmier.
Diskontpolitik ; Goldwährung ; Zentrum-Peripherie-Beziehung ; Geldgeschichte ; Welt ; 1870-1914
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