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International shocks and the balance sheet of the Bank of France under the classical gold standard

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  • Bazot, Guillaume
  • Bordo, Michael D.
  • Monnet, Eric

Abstract

Under the classical gold standard (1880–1914), the Bank of France maintained a stable discount rate while the Bank of England changed its rate very frequently. Why did the policies of these central banks, the two pillars of the gold standard, differ so much? How did the Bank of France manage to keep a stable rate despite international constraints? This paper tackles these questions and shows that the domestic asset portfolio of the Bank of France played a crucial role in smoothing international shocks and in maintaining the stability of the discount rate. As a result, the French discount rate was only changed in exceptional circumstances, for which a change in the English rate was not a sufficient condition.

Suggested Citation

  • Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
  • Handle: RePEc:eee:exehis:v:62:y:2016:i:c:p:87-107
    DOI: 10.1016/j.eeh.2016.07.006
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    References listed on IDEAS

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    Cited by:

    1. Michael Bordo & Robert N McCauley, 2017. "Triffin: dilemma or myth?," BIS Working Papers 684, Bank for International Settlements.
    2. Lennard, Jason, 2018. "Did monetary policy matter? Narrative evidence from the classical gold standard," Explorations in Economic History, Elsevier, vol. 68(C), pages 16-36.
    3. Michael D. Bordo & Pierre Siklos, 2017. "Central Banks: Evolution and Innovation in Historical Perspective," Economics Working Papers 17105, Hoover Institution, Stanford University.
    4. Kramer, Bert S. & Milionis, Petros, 2018. "Democratic Constraints and Adherence to the Classical Gold Standard," GGDC Research Memorandum GD-175, Groningen Growth and Development Centre, University of Groningen.

    More about this item

    Keywords

    E42; E43; E50; E58; N13; N23; Gold standard; Bank of France; Discount rate; Central banking; Money market;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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