The logic of compromise : monetary bargaining in Austria-Hungary 1867-1913
This paper examines the historical record of the Austro-Hungarian monetary union, focusing on its bargaining dimension. As a result of the 1867 Compromise, Austria and Hungary shared a common currency, although they were fiscally sovereign and independent entities. By using repeated threats to quit, Hungary succeeded in obtaining more than proportional control and forcing the common central bank into a policy that was very favourable to it. Using insights from public economics, this paper explains the reasons for this outcome. Because Hungary would have been able to secure quite good conditions for itself had it broken apart, Austria had to provide its counterpart with incentives to stay on board. I conclude that the eventual split of Hungary after WWI was therefore not written on the wall in 1914, since the Austro-Hungarian monetary union was quite profitable to Hungarians.
|Date of creation:||Apr 2006|
|Date of revision:|
|Publication status:||Published in European Review of Economic History, 2006, vol. 10, pp.3-33|
|Contact details of provider:|| Web page: http://www.sciencespo.fr/|
More information through EDIRC
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.:
- Casella, Alessandra, 1992.
"Participation in a Currency Union,"
American Economic Review,
American Economic Association, vol. 82(4), pages 847-63, September.
- Michael G. Spencer & Peter M. Garber, 1992. "The Dissolution of the Austro-Hungarian Empire; Lessons for Currency Reform," IMF Working Papers 92/66, International Monetary Fund.
- Marc Flandreau & Jacques Le Cacheux & Frédéric Zumer, 1998.
"Stability without a pact? Lessons from the European gold standard, 1880-1914,"
CEPR;CES;MSH, vol. 13(26), pages 115-162, 04.
- Flandreau, Marc & Le Cacheux, Jacques & Zumer, Frédéric, 1998. "Stability Without a Pact? Lessons from the European Gold Standard 1880-1914," CEPR Discussion Papers 1872, C.E.P.R. Discussion Papers.
- Marc Flandreau & Clemens Jobst, 2006.
"The Empirics of International Currencies: Evidence from the 19th Century,"
Sciences Po publications
n°5529, Sciences Po.
- Marc Flandreau & Clemens Jobst, 2006. "The Empirics of International Currencies: Evidence from the 19th Century," Working Papers hal-01065631, HAL.
- Pammer, Michael, 1998. "Austrian private investments in Hungary, 1850 1913," European Review of Economic History, Cambridge University Press, vol. 2(02), pages 141-169, August.
- Alberto Alesina & Enrico Spolaore, 1995.
"On the Number and Size of Nations,"
NBER Working Papers
5050, National Bureau of Economic Research, Inc.
- Marc Flandreau & Mathilde Maurel, 2005. "Monetary Union, Trade Integration, and Business Cycles in 19th Century Europe," Open Economies Review, Springer, vol. 16(2), pages 135-152, April.
- Flandreau, Marc & Komlos, John, 2006.
"Target zones in theory and history: Credibility, efficiency, and policy autonomy,"
Journal of Monetary Economics,
Elsevier, vol. 53(8), pages 1979-1995, November.
- Flandreau, Marc & Komlos, John, 2005. "Target Zones in Theory and History: Credibility, Efficiency, and Policy Autonomy," CEPR Discussion Papers 5199, C.E.P.R. Discussion Papers.
- Flandreau, Marc, 1993. "On the inflationary bias of common currencies : The Latin Union puzzle," European Economic Review, Elsevier, vol. 37(2-3), pages 501-506, April.
- Schulze, Max-Stephan, 2000. "Patterns of growth and stagnation in the late nineteenth century Habsburg economy," European Review of Economic History, Cambridge University Press, vol. 4(03), pages 311-340, December.
- Flandreau, Marc & Jobst, Clemens, 2005. "The Ties that Divide. A Network Analysis of the International Monetary System," CEPR Discussion Papers 5129, C.E.P.R. Discussion Papers.
- Flandreau, Marc & Sussman, Nathan, 2004. "Old Sins: Exchange Rate Clauses and European Foreign Lending in the 19th Century," CEPR Discussion Papers 4248, C.E.P.R. Discussion Papers.
- Flandreau, Marc, 2000. "The economics and politics of monetary unions: a reassessment of the Latin Monetary Union, 1865 71," Financial History Review, Cambridge University Press, vol. 7(01), pages 25-44, April.
When requesting a correction, please mention this item's handle: RePEc:spo:wpmain:info:hdl:2441/604. 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: (Spire @ Sciences Po Library)
If references are entirely missing, you can add them using this form.