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Essays on Stability of the Classical Gold Standard: Money Supply, International Capital Mobility and Symmetry of Business Cycles

Dates:
  • Mon 30 Jan 2012 10.00 - 13.00
  Add to Calendar 2012-01-30 10:00 2012-01-30 13:00 Europe/Paris Essays on Stability of the Classical Gold Standard: Money Supply, International Capital Mobility and Symmetry of Business Cycles

The three essays of the thesis have the common topic of monetary integration and financial instability
in Europe during the period of precious metal standard in the second half of the 19th century.
The first essay discusses mainly European business cycles and their inter-country symmetry
from 1865 to 1913. An indicator is developed to measure the symmetry in a way which depicts
temporal changes in the development. The main result of the study is that symmetry of European
business cycles increased considerably from the late 1870s, and was strongest in the heyday of
the Classical Gold Standard, in the 1880s and 1890s. Nevertheless, there was a clear decrease in
symmetry of business cycles in half of the country-pairs of the sample during the last decades before
the First World War.
The second essay studies the impact of international capital transfers on inter-country symmetry
of business cycles in the second half of the 19th century. Money stocks in financially advanced
European countries were found to be connected with both domestic investments and capital exports
in those countries which could export capital. New money tended to be directed to foreign
investments rather than domestic ones. As investments had a crucial impact on economic
growth, international differences in growth of money supply, and differences in growth rates of
investments and net capital exports determined international differences in cyclical growth rates.
The third essay studies the possibility that money supply was determined endogenously in the
advanced European economies in the late 19th century; the evolution of banking as a cause of
that endogeneity, and the consequences of this development on capital flows between countries
participating in the pre-First World War gold standard. It is found that money was supplied by
the private banking sector independently of the gold stocks and independently of central banks’
monetary policy, rendering the financial system potentially unstable. It is also found that money
supply in financially advanced countries was connected with indebtedness of peripheral countries.

Seminar Room 2, Badia Fiesolana - BADIA DD/MM/YYYY
  Seminar Room 2, Badia Fiesolana - BADIA

The three essays of the thesis have the common topic of monetary integration and financial instability
in Europe during the period of precious metal standard in the second half of the 19th century.
The first essay discusses mainly European business cycles and their inter-country symmetry
from 1865 to 1913. An indicator is developed to measure the symmetry in a way which depicts
temporal changes in the development. The main result of the study is that symmetry of European
business cycles increased considerably from the late 1870s, and was strongest in the heyday of
the Classical Gold Standard, in the 1880s and 1890s. Nevertheless, there was a clear decrease in
symmetry of business cycles in half of the country-pairs of the sample during the last decades before
the First World War.
The second essay studies the impact of international capital transfers on inter-country symmetry
of business cycles in the second half of the 19th century. Money stocks in financially advanced
European countries were found to be connected with both domestic investments and capital exports
in those countries which could export capital. New money tended to be directed to foreign
investments rather than domestic ones. As investments had a crucial impact on economic
growth, international differences in growth of money supply, and differences in growth rates of
investments and net capital exports determined international differences in cyclical growth rates.
The third essay studies the possibility that money supply was determined endogenously in the
advanced European economies in the late 19th century; the evolution of banking as a cause of
that endogeneity, and the consequences of this development on capital flows between countries
participating in the pre-First World War gold standard. It is found that money was supplied by
the private banking sector independently of the gold stocks and independently of central banks’
monetary policy, rendering the financial system potentially unstable. It is also found that money
supply in financially advanced countries was connected with indebtedness of peripheral countries.


Location:
Seminar Room 2, Badia Fiesolana - BADIA

Affiliation:
Department of History and Civilization

Type:
Thesis defence

Supervisor:
Prof. Giovanni Federico

Examiner:
Prof. Youssef Cassis (EUI)
Prof. Rui Esteves (University of Oxford)
Prof. Lennart Schön (Lund University)

Contact:
Roberta Saccon - Send a mail

Defendant:
Jyrki Johannes Lessig (EUI - Department of History and Civilization)
 

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