Fiscal Dominance and Money Growth in Italy: The Long Record
34 Pages Posted: 12 Apr 1999
Abstract
Fiscal dominance, that is, the extent to which government deficits condition the growth of the money supply, has been the prevailing regime in Italian monetary history from the creation of the state in 1861 to the 1980s. The nature of the institutional structure linking budget deficits to monetary base creation has changed over time. In the early days, the profit-seeking banks of issue exceeded intermittently the legal ceiling on their outstanding currency to lend to government. The influence of public finance on monetary policy became even stronger, first, in the 1930s and, later, in the 1970s. The joint event of an independent central bank and lower budget deficits are responsible for a reversal of fiscal dominance in the 1980s and the 1990s.
Keywords: budget deficits, fiscal dominance, monetary accommodation, central bank independence
JEL Classification: E51, E58, N13, N14
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Yongsung Chang and Sun-bin Kim
-
Substitution Over Time: Another Look at Life Cycle Labor Supply
-
Government Spending, Interest Rates, Prices, and Budget Deficits in the United Kingdom, 1701-1918
-
By Yongsung Chang and Sun-bin Kim
-
Microfoundations and Macro Implications of Indivisible Labor
-
Pecuniary Incentives to Work in the U.S. During World War Ii
-
Aggregate Implications of Indivisible Labor, Incomplete Markets, and Labor Market Frictions
By Per Krusell, Toshihiko Mukoyama, ...