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Money demand under free banking: Switzerland 1851–1906

Author

Listed:
  • Stefan Gerlach

    (BSI Bank
    CEPR)

  • Peter Kugler

    (University of Basel)

Abstract

This paper studies money demand in Switzerland under free banking before the establishment of the Swiss National Bank. We find that, in addition to income, the banks’ balance-sheet-to-GDP ratio and the number of banks were important determinants of long-run money demand. The former variable also played an important role in the monetary adjustment process. We also detect a strong positive long-run impact of real income on the bank’s balance-sheet-total-to-GDP ratio and a strong long-run influence of real income and the interest rate spread on the number of banks.

Suggested Citation

  • Stefan Gerlach & Peter Kugler, 2018. "Money demand under free banking: Switzerland 1851–1906," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-8, December.
    • Handle: RePEc:spr:sjecst:v:154:y:2018:i:1:d:10.1186_s41937-017-0013-8
    DOI: 10.1186/s41937-017-0013-8
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    References listed on IDEAS

    as
    1. Milton Friedman & Anna J. Schwartz, 1982. "Monetary Trends in the United States and United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867–1975," NBER Books, National Bureau of Economic Research, Inc, number frie82-2.
    2. Ernst Baltensperger & Peter Kugler, 2016. "The historical origins of the safe haven status of the Swiss franc:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(02), pages 1-30, August.
    3. repec:bla:kyklos:v:41:y:1988:i:3:p:459-78 is not listed on IDEAS
    4. Baltensperger,Ernst & Kugler,Peter, 2017. "Swiss Monetary History since the Early 19th Century," Cambridge Books, Cambridge University Press, number 9781107199309, October.
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    Citations

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    Cited by:

    1. Herger, Nils, 2022. "Unregulated and regulated free banking: Evidence from the case of Switzerland (1826–1907)," Explorations in Economic History, Elsevier, vol. 83(C).
    2. Nils Herger, 2019. "Unregulated and regulated free banking. The case of Switzerland reinterpreted," Working Papers 19.06, Swiss National Bank, Study Center Gerzensee.
    3. Nils Herger, 2021. "Regulated free banking in Switzerland (1881–1907)," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 157(1), pages 1-12, December.

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