Paper money but a gold debt: Italy on the gold standard
During the 52 years between the Unification of the Kingdom of Italy and World War 1, the lira was legally convertible into metal for a limited period of time. Although not formally committed to gold, the lira exchange towards the gold standard countries proved remarkably stable, \223shadowing\224 gold. It is widely claimed that being one of the successful members of the gold standard circle entailed a number of advantages. If the lira was closely linked to gold, suggesting that there was only a small cost connected to adopting the gold standard, then why did Italy not make all possible efforts to resume as soon as possible and adhere more strictly to the gold standard? Italy had a large foreign debt that was basically the result of Unification. This debt was denominated in lira, but foreign holders could convert their coupons into gold at the official rate in Paris. Italy could exploit its domestic bondholders by allowing the lira to depreciate, while insisting that domestic holders of the debt accept lira. But there were limits to this process because Italians could take the coupons to Paris have them paid in gold and because payments abroad, in gold, became more expensive following depreciation. The paper explores the various measures the Italian government used to prevent arbitrage, and the strategies bondholders used to circumvent them. In the end, however, it was clear that if devaluation went too far, most of the coupons would be presented in Paris, the debt would de facto became a gold debt, and the Italian Treasury would suffer a substantial loss of gold. Hence the convenience of letting the lira float downward and exploit seignorage any time domestic conditions became more critical. At the same time it was necessary to keep depreciation within a certain range, \223shadowing\224 the lira par value.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bordo, Michael D. & Rockoff, Hugh, 1996.
"The Gold Standard as a “Good Housekeeping Seal of Approval”,"
The Journal of Economic History,
Cambridge University Press, vol. 56(02), pages 389-428, June.
- Hugh Rockoff & Michael D. Bordo, 1996. "The Gold Standard as a "Good Housekeeping Seal of Approval"," Departmental Working Papers 199528, Rutgers University, Department of Economics.
- Michael D. Bordo, 1995. "The Gold Standard as a `Good Housekeeping Seal of Approval'," NBER Working Papers 5340, National Bureau of Economic Research, Inc.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
- Michael D. Bordo & Angela Redish, 1990.
"Credible Commitment and Exchange Rate Stability: Canada's Interwar Experience,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 23(2), pages 357-80, May.
- Michael D. Bordo & Angela Redish, 1987. "Credible Commitment and Exchange Rate Stability: Canada's Interwar Experience," NBER Working Papers 2431, National Bureau of Economic Research, Inc.
- Barry Eichengreen and Marc Flandreau., 1994.
"The Geography of the Gold Standard,"
Center for International and Development Economics Research (CIDER) Working Papers
C94-042, University of California at Berkeley.
- Di Martino Paolo, 2001. "Corso della Rendita e andamenti del tasso di cambio della Lira negli anni del "gold standard" (1883-1893)," Rivista di storia economica, Società editrice il Mulino, issue 1, pages 3-32.
- Tattara, Giuseppe & volpe, mario, 1997. "Italy, the fiscal dominance model, and the gold standard age," MPRA Paper 37155, University Library of Munich, Germany.
- Zamagni Vera, 1999. "Una rettifica," Rivista di storia economica, Società editrice il Mulino, issue 3, pages 339-342.
- Bordo Michael D. & Kydland Finn E., 1995. "The Gold Standard As a Rule: An Essay in Exploration," Explorations in Economic History, Elsevier, vol. 32(4), pages 423-464, October.
- repec:cup:cbooks:9780521023450 is not listed on IDEAS
- Phillips, Peter C B & Hansen, Bruce E, 1990.
"Statistical Inference in Instrumental Variables Regression with I(1) Processes,"
Review of Economic Studies,
Wiley Blackwell, vol. 57(1), pages 99-125, January.
- Tom Doan, . "FM: RATS procedure to estimate cointegrating vectors using Fully Modified Least Squares," Statistical Software Components RTS00069, Boston College Department of Economics.
- repec:cup:cbooks:9780521443159 is not listed on IDEAS
- Fishlow, Albert, 1985. "Lessons from the past: capital markets during the 19th century and the interwar period," International Organization, Cambridge University Press, vol. 39(03), pages 383-439, June.
When requesting a correction, please mention this item's handle: RePEc:eee:exehis:v:40:y:2003:i:2:p:122-142. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.