An Empirical Assessment of the Swedish Bullionist Controversy. (2nd August 2019)

• Record Type: Journal Article
• Authors: Herger, Nils
• Is Part Of: Scandinavian journal of economics. Volume 122:Number 3(2020)
• Page Start: 911
• Page End: 936
• Publication Date: 2019-08-02
• Subjects: Bullionism -- floating exchange rate -- inconvertible banknotes -- paper money -- Sweden; Economics -- Periodicals; 330.05
• DOI: 10.1111/sjoe.12337
• Languages: English
• ISSNs: 0347-0520

Abstract

Abstract: In the 18th century, a fierce political debate broke out in Sweden about the causes of an extraordinary depreciation of the currency. More specifically, the deteriorating value of the Swedish currency was blamed arbitrarily on monetary causes (e.g., the overissuing of banknotes) and on non‐monetary causes (such as balance‐of‐payments deficits). This paper provides a comprehensive empirical assessment of this so‐called "Swedish Bullionist Controversy". The results of vector autoregressions suggest that increasing amounts of paper money did give rise to inflation and a depreciation of the exchange rate. Conversely, non‐monetary factors were probably less important for these developments.