Premium
An Empirical Assessment of the Swedish Bullionist Controversy *
Author(s) -
Herger Nils
Publication year - 2020
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12337
Subject(s) - economics , depreciation (economics) , currency , inflation (cosmology) , balance of payments , monetary economics , exchange rate , value (mathematics) , monetary policy , macroeconomics , keynesian economics , international economics , market economy , physics , capital formation , machine learning , financial capital , theoretical physics , computer science , human capital
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.