Cigarette Money and Black Market Prices around the 1948 German Miracle

This paper is an empirical study of the distribution of black prices among 120 Bavarian locations at two dates, the beginning of July, 1947 and the end of June, 1948. It shows huge differences in the liquidity of those goods either when measured with the coefficient of variation or the number of locations in which those goods were traded. The main finding is that liquidity of cigarette was very high either when measured by the coefficient of variation and or the number of counties that traded them. This made them special, even when compared with a pure fiat object such as the US dollar. Consistently with the insights of the modern theory of money, the high liquidity of cigarettes is indicative of its use as money.

The Economics of Badmouthing: Libel Law and the Underworld of the Financial Press in France before World War I

This article analyzes the economics of “badmouthing” in the context of the pre-1914 French capital market. We argue that badmouthing was a means through which racketeering journals sought to secure property rights over issuers’ reputation. We provide a theoretical study of the market setup that emerged to deal with such problems, and we test our predictions using new evidence from contemporary sources.badmouthing, capital market, reputation.

The Economics of Badmouthing: Libel Law and the Underworld of the Financial Press in France Before World War I

This article analyzes the economics of "badmouthing” in the context of the pre-1914 French capital market. We argue that badmouthing was a means through which racketeering journals sought to secure property rights over issuers' reputation. We provide a theoretical study of the market setup that emerged to deal with such problems, and we test our predictions using new evidence from contemporary sources. "A newspaper that wishes to make its fortune should never waste its columns and weary its readers by praising anything. Eulogy is invariably dull—a fact that Mr. Alf had discovered and utilized.” A. Trollope, The Way We Live Now, 1875 "And did you threaten him with the newspapers?” H. de Balzac, La maison Nucingen, 183

The Failure of a Clearinghouse: Empirical Evidence. ECMI Working Paper No. 6 / December 2017

This paper provides the first detailed empirical analysis of the failure of a derivatives clearinghouse: the Caisse de Liquidation, which defaulted in Paris in 1974. Using archival data, we find three main causes of the failure: i) a weak pool of investors, ii) the inability to contain the growth of a large member position and iii) risk-shifting decisions by the clearinghouse. Riskshifting incentives aligned the clearinghouse’s interests with those of the defaulting member, induced delays in the liquidation of the defaulted position and led attempts at privatee This paper provides the first detailed empirical analysis of the failure of a derivatives clearinghouse: the Caisse de Liquidation, which defaulted in Paris in 1974. Using archival data, we find three main causes of the failure: i) a weak pool of investors, ii) the inability to contain the growth of a large member position and iii) risk-shifting decisions by the clearinghouse. Riskshifting incentives aligned the clearinghouse’s interests with those of the defaulting member, induced delays in the liquidation of the defaulted position and led attempts at private renegotiation to fail. Our results hav This paper provides the first detailed empirical analysis of the failure of a derivatives clearinghouse: the Caisse de Liquidation, which defaulted in Paris in 1974. Using archival data, we find three main causes of the failure: i) a weak pool of investors, ii) the inability to contain the growth of a large member position and iii) risk-shifting decisions by the clearinghouse. Riskshifting incentives aligned the clearinghouse’s interests with those of the defaulting member, induced delays in the liquidation of the defaulted position and led attempts at private renegotiation to fail. Our results have implications for current policy debates on the design and resolution of clearing institutions

The price of media capture and the looting of newspapers in interwar France

This paper develops a new insight enabling the empirical study of media capture: minority shareholders of newspapers and readers face similar risks. Both are adversely affected when corrupt insiders use the newspaper for personal profit and receive invisible revenues. This means that relevant data on influence and exploitation of newspaper has been hiding in plain sight in stock exchange or over-the-counter prices, since stock transactions reflect the value of this capture. Empirical data is consistent with increasing levels of looting in France during the 1930s. We provide a comparison with Britain and argue that Britain managed to protect its newspapers better

How the Bank of France increased liquidity at no fiscal risk in the 1800’s

It screened and monitored institutions carefully, with strict internal governance to mitigate moral hazard, write Vincent Bignon and Maylis Avar

Economic crises and the eligiblity for the lender of last resort: Evidence from 19th century France

This paper uses panel econometric techniques to estimate a macro-financial model for fee and commission income over total assets for a broad sample of euro area banks. Using the estimated parameters, it conducts a scenario analysis projecting the fee and commission income ratio over a three years horizon conditional on the baseline and adverse macroeconomic scenarios used in the 2016 EU-wide stress test. The results indicate that the fee and commission income ratio is varying in particular with changes in its own lag, the shortterm interest rate, stock market returns and real GDP growth. They also show that the fee and commission income ratio projections are more conservative under the adverse scenario than under the baseline scenario. These findings suggest that stress tests assuming scenario-independent fee and commission income projections are likely to be awed

Bagehot for Beginners : The Making of Lender of Last Resort Operations in the Mid-Nineteenth Century

International audienceIn this article we develop new tools to survey the development of lending-of-last-resort operations in the mid-nineteenth century. One finding is that free lending and extensive liquidity support against good collateral developed gradually after 1847, and was already a fact of life before Bagehot published Lombard Street. Another is that the extension of the Bank of England's lender-of-last-resort function went along with a reduction of its exposure to default risks, in contrast with accounts that have associated lending of last resort with moral hazard. Finally, we provide a new interpretation of the 'high rates' advocated by Bagehot. We suggest they were meant to prevent banks from free-riding on the safety offered by the central bank, and were aimed at forcing them to keep lending during crises so as to maintain a critical degree of liquidity in the money market

Stealing to Survive? Crime and Income Shocks in 19th Century France

Using local administrative data from 1826 to 1936, we document the evolution of crime rates in 19th century France and we estimate the impact of a negative income shock on crime. Our identification strategy exploits the phylloxera crisis. Between 1863 and 1890, phylloxera destroyed about 40% of French vineyards. We use the geographical variation in the timing of this shock to identify its impact on property and violent crime rates, as well as minor offences. Our estimates suggest that the phylloxera crisis caused a substantial increase in property crime rates and a significant decrease in violent crimes

Currency union with or without banking union

We build a symmetric two‐country monetary model with credit to study the interplay between currency integration and credit markets integration. The currency arrangement affects credit availability through default incentives. We capture credit markets integration by the extra cost incurred to obtain credit for cross‐border transactions and, with the euro area context in mind, label as banking union a situation where this cost is low. For high levels of the cross‐border credit cost, currency integration may magnify default incentives, leading to more credit rationing and lower welfare. The integration of credit markets restores the optimality of the currency union.Cet article propose un modèle avec monnaie externe, banques et défaut endogène sur les emprunts afin d’analyser l’impact du degré d’imperfection dumarché du crédit sur la désirabilité -pour les populations- des unions monétaires.Nous montrons que lorsque ces imperfections entraînent un coût plus élevé pourles banques d’octroyer un crédit sur l’étranger plutôt que dans leur juridiction, le bien-être peut être réduit en régime d’union monétaire. Nous montrons également que la mise en place d’une union bancaire qui supprimeraitces barrières à l’intégration des marchés du crédit restaure le résultat habitueld’optimalité des unions . Les implications empiriques de ces résultats pourl’organisation de l’union bancaire sont discutées