The Drachma, Foreign Creditors and the International Monetary System: Tales of a Currency during the 19th and the Early 20th Century

Fixed exchange rate regimes can be regarded as a “rule with escape clauses”, allowing the monetary authorities to temporarily suspend convertibility and enact a discretionary policy only under well-understood contingencies, such as wartime emergencies and financial panics. Seen from this perspective, adherence to the specie convertibility rule enables peripheral countries to establish credibility of the nation’s economic policy and, thus, to obtain access to the core countries’ capital markets. The evidence assembled in the paper, both historical and empirical, supports the conclusion that Greece seems to have tried very hard to adhere to “good housekeeping rules”.specie standards, foreign borrowing, peripheral country

Money supply and Greek history monetary statistics: definition, construction, sources and data

This paper attempts to provide, for the first time, a survey of the construction of estimates of the quantity of money in Greece since the inception of the National Bank of Greece in 1842 until the eve of WWII. Specifically, we describe in detail the methods of construction and the sources of data used in building these aggregates. We discuss the data collection procedure and publication practices. The end product is presented in a data appendix.money; monetary aggregates; data; sources

Corporate Ownership Structure and Firm Performance: Evidence from Greek Firms

The Berle-Means thesis (1932) implies that diffuse ownership adversely affects firm performance. This paper tries to investigate whether there is strong evidence to support the notion that variations across firms in observed ownership structures result in systematic variations in observed firm performance. We test this hypothesis by assessing the impact of the structure of ownership on corporate performance, measured by profitability, using data for 175 Greek listed firms. Following Demsetz and Villalonga (2001) we model ownership structure, first, as an endogenous variable and, second, we consider two different measures of ownership structure reflecting different groups of shareholders with conflicting interests. Empirical findings suggest that a more concentrated ownership structure positively relates to higher firm profitability. We also find that higher firm profitability requires a less diffused ownership.Money demand; Ownership structure; Firm performance

Inflation persistence during periods of structural change: an assessment using Greek data

The paper estimates inflation persistence in Greece from 1975 to 2003, a period of high variation in inflation and changes in policy regimes. Two empirical methodologies, univariate autoregressive (AR) modelling and second-generation random coefficient (RC) modelling, are employed to estimate inflation persistence. The empirical results from all the procedures suggest that inflation persistence was high during the inflationary period and the first six years of the disinflationary period, while it started to decline after 1997, when inflationary expectations seem to have been stabilised, and thus, monetary policy was effective at reducing inflation. Empirical findings also detect a sluggish response of inflation to changes in monetary policy. This observed delay seems to have changed little over time. JEL Classification: E31, E37CPI inflation, Persistence, structural change

Inflation Persistence during Periods of Structural Change: An Assessment Using Greek Data

The paper estimates inflation persistence in Greece from 1975 to 2003, a period of high variation in inflation and changes in policy regimes. Three empirical methodologies, univariate autoregressive (AR) modelling, second-generation random coefficient (RC) modelling, and vector autoregressive (VAR) modelling, are employed to estimate inflation persistence. The empirical results from all the procedures suggest that inflation persistence was high during the inflationary period and the first six years of the disinflationary period, while it started to decline after 1997, when inflationary expectations seem to have been stabilised, and thus, monetary policy was effective at reducing inflation. Empirical findings also detect a sluggish response of inflation to changes in monetary policy. This observed delay seems to have changed little over time.CPI inflation; persistence; structural change

Inflation persistence during periods of structural change: an assessment using Greek data

The paper estimates inflation persistence in Greece from 1975 to 2003, a period of high variation in inflation and changes in policy regimes. Two empirical methodologies, univariate autoregressive (AR) modelling and second-generation random coefficient (RC) modelling, are employed to estimate inflation persistence. The empirical results from all the procedures suggest that inflation persistence was high during the inflationary period and the first six years of the disinflationary period, while it started to decline after 1997, when inflationary expectations seem to have been stabilised, and thus, monetary policy was effective at reducing inflation. Empirical findings also detect a sluggish response of inflation to changes in monetary policy. This observed delay seems to have changed little over time

Banking and Central Banking in Pre-WWII Grecce: Money and Currency Developments

This paper aims to trace the history of central banking in pre-WWII Greece. To this end, we first study the country’s financial structure and its process of financial development. Several indices of financial development have been assessed and their evolvement has been studied. The country’s financial development had passed through different stages. Financial depth had increased in the turn of the 19th century and expanded further in the 1920s. However, on the basis of behavioural indices, banks were shown to be poorly asset-liability managed. They were also suffered by capital adequacy and were highly leveraged. The analysis of the composition of money supply and its long run behaviour suggests that monetary base variations were the proximate determinants of money supply movements, whereas money multiplier had a minimum impact. Central banking in pre-WWII Greece is viewed with regard to the monetary policy strategy, the monetary policy implementation framework and state interventions. The balance sheet of the Bank of Greece reveals an excessive focus on the chosen monetary policy strategy of a currency peg. Domestic credit was controlled via liquidity-providing standing facilities, either discounts or advances. Moreover, Bank’s considerable involvement in government re-financing might indicate that state interventions were considerable.Central banking; Financial intermediation; Money.

South-Eastern European monetary and economic statistics from the nineteenth century to WWII

This paper introduces the Data Collection Task Force of the South-East European Monetary History Network (SEEMHN DCTF) and its first result. Good policy making should be grounded on good data. To this end, the SEEMHN DCTF works since 2006 towards establishing a SEE macro history database of 19th and 20th century key financial and monetary statistics. All task force members acknowledge that this goal could only be achieved by joining forces and through the exchange of knowledge and experience. Therefore, the SEEMHN DCTF involved cooperation between representatives from all SEE national central banks and scholars who specialise in different fields, geographical regions and time periods. Its first result concerns a new statistics publication entitled South-Eastern European Monetary and Economic Statistics from the Nineteenth Century to World War II. It contains a newly compiled, built and harmonised dataset of long-run key monetary and macroeconomic time series. The aim of this paper is threefold. First, we briefly present this new statistical database. Second, we discuss techniques and technology followed in the data compilation and building process, as well as archives and published sources used. Third, we briefly present the new data project on which the SEEMHN will keep working in the near future

Did Adhering to the Gold Standard Reduce the Cost of Capital?

A commonly cited benefit of the pre-World War One gold standard is that it reduced the cost of international borrowing by signaling a country's commitment to financial probity. Using a newly constructed data set that consists of more than 55,000 monthly sovereign bond returns, we test if gold-standard adherence was negatively correlated with the cost of capital. Conditional on UK risk factors, we find no evidence that the bonds issued by countries off gold earned systematically higher excess returns than the bonds issued by countries on gold. Our results are robust to allowing betas to differ across bonds issued by countries off-and on-gold; to including proxies that capture the effect of fiscal, monetary, and trade shocks on the commitment to gold; and to controlling for the effect of membership in the British Empire