By the same authors

Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939

Research output: Working paper

Standard

Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939. / Morys, Matthias.

European Historical Economics S, 2015. p. 1-45 (European Historical Economics Society Working Paper).

Research output: Working paper

Harvard

Morys, M 2015 'Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939' European Historical Economics Society Working Paper, European Historical Economics S, pp. 1-45. <http://www.ehes.org/ehes2015/papers/Morys.pdf>

APA

Morys, M. (2015). Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939. (pp. 1-45). (European Historical Economics Society Working Paper). European Historical Economics S. http://www.ehes.org/ehes2015/papers/Morys.pdf

Vancouver

Morys M. Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939. European Historical Economics S. 2015 Aug, p. 1-45. (European Historical Economics Society Working Paper).

Author

Morys, Matthias. / Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939. European Historical Economics S, 2015. pp. 1-45 (European Historical Economics Society Working Paper).

Bibtex - Download

@techreport{c71841e6bddb4607bde4f7e3539e534b,
title = "Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939",
abstract = "We add a historical and regional dimension to the debate on the Greek debt crisis. Analysing the 1841-1939 exchange-rate experience of Greece, Bulgaria, Romania and Serbia/Yugoslavia, we find surprising parallels to the present: repeated cycles of entry to and exit from gold, government debt build-up and default, and financial supervision by West European countries. Periods of stable exchange-rates were more short-lived than in any other part of Europe as a result of “fiscal dominance”, i.e., a monetary policy subjugated to the treasury{\textquoteright}s needs. Granger causality tests show that patterns of fiscal dominance were onlybroken under financial supervision, when strict conditionality scaled back the influence of treasury; only then were central banks able to pursue a rule-bound monetary policy and, in turn, stabilize their exchange-rates. Fiscal institutions have remained weak in the case of Greece and are at the heart of the current crisis. A lesson for today might be that the EU-IMF programmes – with their focus on improving fiscal capacity and made effective by conditionality similar to the earlier South-East European experience – remain the best guarantor of continued Greek EMU membership. Understandable public resentment against“foreign intrusion” needs to be weighed against their potential to secure the long-term political and economic objective of exchange-rate stabilisation.",
author = "Matthias Morys",
year = "2015",
month = aug,
language = "English",
series = "European Historical Economics Society Working Paper",
publisher = "European Historical Economics S",
pages = "1--45",
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RIS (suitable for import to EndNote) - Download

TY - UNPB

T1 - Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939

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PY - 2015/8

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N2 - We add a historical and regional dimension to the debate on the Greek debt crisis. Analysing the 1841-1939 exchange-rate experience of Greece, Bulgaria, Romania and Serbia/Yugoslavia, we find surprising parallels to the present: repeated cycles of entry to and exit from gold, government debt build-up and default, and financial supervision by West European countries. Periods of stable exchange-rates were more short-lived than in any other part of Europe as a result of “fiscal dominance”, i.e., a monetary policy subjugated to the treasury’s needs. Granger causality tests show that patterns of fiscal dominance were onlybroken under financial supervision, when strict conditionality scaled back the influence of treasury; only then were central banks able to pursue a rule-bound monetary policy and, in turn, stabilize their exchange-rates. Fiscal institutions have remained weak in the case of Greece and are at the heart of the current crisis. A lesson for today might be that the EU-IMF programmes – with their focus on improving fiscal capacity and made effective by conditionality similar to the earlier South-East European experience – remain the best guarantor of continued Greek EMU membership. Understandable public resentment against“foreign intrusion” needs to be weighed against their potential to secure the long-term political and economic objective of exchange-rate stabilisation.

AB - We add a historical and regional dimension to the debate on the Greek debt crisis. Analysing the 1841-1939 exchange-rate experience of Greece, Bulgaria, Romania and Serbia/Yugoslavia, we find surprising parallels to the present: repeated cycles of entry to and exit from gold, government debt build-up and default, and financial supervision by West European countries. Periods of stable exchange-rates were more short-lived than in any other part of Europe as a result of “fiscal dominance”, i.e., a monetary policy subjugated to the treasury’s needs. Granger causality tests show that patterns of fiscal dominance were onlybroken under financial supervision, when strict conditionality scaled back the influence of treasury; only then were central banks able to pursue a rule-bound monetary policy and, in turn, stabilize their exchange-rates. Fiscal institutions have remained weak in the case of Greece and are at the heart of the current crisis. A lesson for today might be that the EU-IMF programmes – with their focus on improving fiscal capacity and made effective by conditionality similar to the earlier South-East European experience – remain the best guarantor of continued Greek EMU membership. Understandable public resentment against“foreign intrusion” needs to be weighed against their potential to secure the long-term political and economic objective of exchange-rate stabilisation.

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BT - Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939

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