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

Author

Listed:
  • Guillaume Bazot

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8)

  • Michael Bordo
  • Eric Monnet

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Guillaume Bazot & Michael Bordo & Eric Monnet, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Post-Print hal-04288225, HAL.
    • Handle: RePEc:hal:journl:hal-04288225
    DOI: 10.1016/j.eeh.2016.07.006
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    Cited by:

    1. Paolo Di Martino & Fabio C. Bagliano, 2022. "A dissonant violin in the international orchestra? Discount rate policy in Italy (1894-1913)," Carlo Alberto Notebooks 682 JEL Classification: N, Collegio Carlo Alberto.
    2. Di Martino, Paolo & Bagliano, Fabio C., 2025. "Monetary policy at the periphery during the Classical Gold Standard: Italy (1894–1913)," Explorations in Economic History, Elsevier, vol. 97(C).
    3. Eric Monnet, 2024. "Interest Rates," Springer Books, in: Claude Diebolt & Michael Haupert (ed.), Handbook of Cliometrics, edition 3, pages 1531-1549, Springer.
    4. Bignon, Vincent & Flandreau, Marc, 2018. "The Other Way: A Narrative History of the Bank of France," CEPR Discussion Papers 13138, C.E.P.R. Discussion Papers.
    5. Michael D. Bordo & Pierre L. Siklos, 2017. "Central Banks: Evolution and Innovation in Historical Perspective," NBER Working Papers 23847, National Bureau of Economic Research, Inc.
    6. Kramer, Bert S. & Milionis, Petros, 2022. "Democratic constraints and adherence to the classical gold standard," Explorations in Economic History, Elsevier, vol. 84(C).
    7. Fliers, Philip T. & Colvin, Christopher L., 2022. "Going Dutch: monetary policy in the Netherlands during the interwar gold standard, 1925–1936," Financial History Review, Cambridge University Press, vol. 29(2), pages 121-151, August.
    8. Monnet, Eric & Puy, Damien, 2020. "Do old habits die hard? Central banks and the Bretton Woods gold puzzle," Journal of International Economics, Elsevier, vol. 127(C).
    9. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the gobal financial cycle: Central banks and the sterilization of capital flows in the first era of globalization," IBF Paper Series 03-19, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    10. Mitchener, Kris James & Pina, Gonçalo, 2023. "The effects of countercyclical interest rates: Evidence from the classical gold standard," Journal of International Economics, Elsevier, vol. 145(C).
    11. Paolo Di Martino, 2021. "Central Banks' Intervention in Exchange Rate Markets During the "Classical" Gold Standard: Italy 1880-1913," Working papers 072, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    12. 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.
    13. Michael D. Bordo & Robert N. McCauley, 2019. "Triffin: Dilemma or Myth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(4), pages 824-851, December.
    14. Guillaume Bazot & Eric Monnet & Matthias Morys, 2024. "Central banks and the absorption of international shocks (1891-2019)," Working Papers halshs-04778323, HAL.
    15. George Pantelopoulos, 2021. "Exogenous and endogenous sterilisation under managed exchange rates," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 756-779, September.
    16. Stefano Ugolini, 2018. "The Historical Evolution of Central Banking," Post-Print hal-01887004, HAL.
    17. Kris James Mitchener & Eric Monnet, 2023. "Connected Lending of Last Resort," NBER Working Papers 30869, National Bureau of Economic Research, Inc.
    18. Monnet, Eric & bazot, guillaume & Morys, Matthias, 2019. "Taming the Global Financial Cycle: Central Banks and the Sterilization of Capital Flows in the First Era of Globalization (1891," CEPR Discussion Papers 13895, C.E.P.R. Discussion Papers.

    More about this item

    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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