Money and monetary stability in Europe, 1300–1914

Kıvanç Karaman, Sevket Pamuk () and Seçil Yıldırım-Karaman

Journal of Monetary Economics, 2020, vol. 115, issue C, 279-300

Abstract: This paper investigates the determinants of monetary stability in Europe from the late medieval era until World War I. Through this period, the anchor for monetary policy was the silver or gold value of the monetary unit. States, however, frequently abandoned this anchor, some depreciating their monetary units against silver and gold less than 10-fold and others more than 10,000-fold between 1500 and 1914. To understand the determinants of these differences, we compile a new and comprehensive monetary history dataset for all major states in Europe and test alternative theories. We find strong evidence that political factors, and in particular, fiscal capacity, political regime and warfare explain patterns of monetary stability. This finding is robust to addressing endogeneity, controlling for the instability induced by the mechanics of the monetary system and accounting for the impacts of new monetary technologies and the advent of fiat standard.

Keywords: Monetary stability; Monetary standards; Fiat money; Commodity money; Seigniorage (search for similar items in EconPapers)
JEL-codes: E31 E42 E52 N13 N43 O23 O43 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Money and Monetary Stability in Europe, 1300-1914 (2018)
Working Paper: Money and Monetary Stability in Europe, 1300-1914 (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:115:y:2020:i:c:p:279-300

DOI: 10.1016/j.jmoneco.2019.07.007

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