Money dynamics with multiple banks of issue: evidence from Spain 1856-1874

Galo Nuño Barrau, Pedro Tedde () and Alessio Moro
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Pedro Tedde: Banco de España

No 1119, Working Papers from Banco de España

Abstract: This paper analyzes the Spanish monetary system from 1856, when the Bank of Spain was created, to 1874, when it was awarded the monopoly of emission. This period was characterized by the emergence of an unregulated banking system, with multiple banks of issue entitled to emit bank notes. We focus on two main issues: i) the large fluctuations in the money supply during this period; and ii) the lack of a lender of last resort in the banking panic of 1866. To analyze this, we construct a new dataset on money supply aggregates. The paper also estimates the economic impact of monetary fluctuations with the help of a calibrated new Keynesian model. Our results suggest that money supply shocks had a milder effect on inflation and output than the one predicted by the theory.

Keywords: unregulated banking; Gresham’s`law; lender of last resort; Overend and Gurney crisis (search for similar items in EconPapers)
JEL-codes: E31 E5 N13 N23 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2011-09
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1119

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