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Italy, the fiscal dominance model, and the gold standard age

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  • Tattara, Giuseppe
  • volpe, mario

Abstract

The paper links money supply to the state budget deficit in the Italian historical context. The process of monetization of government deficit is analysed and is related both to the fixity of the exchange rate and free capital mobility typical of the 1860-1913 period. The empirical evidence supporting the view of Italy “shadowing” gold is discussed and the effect of government financing on money supply is tested. The conlusion discusses the implications of the model and of the empirical evidence for the interpretation of the Gold Standard.

Suggested Citation

  • Tattara, Giuseppe & volpe, mario, 1997. "Italy, the fiscal dominance model, and the gold standard age," MPRA Paper 37155, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37155
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    File URL: https://mpra.ub.uni-muenchen.de/37155/1/MPRA_paper_37155.pdf
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    References listed on IDEAS

    as
    1. Fratianni,Michele & Spinelli,Franco, 2005. "A Monetary History of Italy," Cambridge Books, Cambridge University Press, number 9780521023450, September.
    2. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    3. Fishlow, Albert, 1985. "Lessons from the past: capital markets during the 19th century and the interwar period," International Organization, Cambridge University Press, vol. 39(3), pages 383-439, July.
    4. Marc Flandreau & Jacques Le Cacheux & Frédéric Zumer, 1998. "Stability without a pact? Lessons from the European gold standard, 1880—1914," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 116-162.
    5. Eichengreen, Barry & Flandreau, Marc, 1994. "The Geography of the Gold Standard," Center for International and Development Economics Research (CIDER) Working Papers 233393, University of California-Berkeley, Department of Economics.
    6. Tattara, Giuseppe, 2003. "Paper money but a gold debt: Italy on the gold standard," Explorations in Economic History, Elsevier, vol. 40(2), pages 122-142, April.
    7. Tattara, Giuseppe, 2000. "Was Italy ever on gold?," MPRA Paper 37160, University Library of Munich, Germany.
    8. Marc Flandreau, 1996. "The Geography of the Gold Standard," Post-Print hal-03398015, HAL.
    9. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    10. Storaci, Marina & Tattara, Giuseppe, 1998. "The external financing of Italian electric companies in the interwar years," European Review of Economic History, Cambridge University Press, vol. 2(3), pages 345-375, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Giuseppe Tattara, 2002. "Un margine di arbitraggio non sfruttato sulla Rendita Italiana a Parigi?," Rivista di storia economica, Società editrice il Mulino, issue 1, pages 51-64.
    2. tattara, Giuseppe, 1995. "Bilancia dei pagamenti, movimenti dei capitali ed equilibrio interno nei primi 50 anni del regno d'Italia [Balance of payments, capital movements, domestic equilibrium in the first 50 years of the ," MPRA Paper 39086, University Library of Munich, Germany.
    3. Tattara, Giuseppe, 2003. "Paper money but a gold debt: Italy on the gold standard," Explorations in Economic History, Elsevier, vol. 40(2), pages 122-142, April.
    4. Luis A. V. Catão, 2007. "Sudden Stops and Currency Drops: A Historical Look," NBER Chapters, in: The Decline of Latin American Economies: Growth, Institutions, and Crises, pages 243-290, National Bureau of Economic Research, Inc.
    5. 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.
    6. Roldan Alba, 2022. "The Golden Fetters in the Mediterranean Periphery. How Spain and Italy Overcame Business Cycles Between 1870 and 1913?," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 16(1), pages 170-193, January.

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    More about this item

    Keywords

    Monetary theory; Gold Standard; Fiscal theory; Economic History of Italy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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