Working Paper: NBER ID: w8717
Authors: Michael D. Bordo; Anna J. Schwartz
Abstract: Our paper examines Charles Goodhart's work on the history of monetary institutions: central bank operations under the gold standard, their behaviour in relation to the financial system in which they functioned, including their responses to banking crises, and their performance as lenders of last resort. Although we differ with Charles on some of the conclusions that he has reached, we pay tribute to his importance in shaping the discussion by economists over a thirty-year span on questions related to the functioning of banks, their customers, and the historic central banks that evolved from serving government to serving banks.
Keywords: monetary institutions; central banks; gold standard; banking crises; lenders of last resort
JEL Codes: E58; G18; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| demands of the financial system (G21) | operational structure of central banks (E58) |
| bank rate rises (E43) | short-term capital inflows (F32) |
| increased economic activity (F69) | increased commercial bank lending (G21) |
| changes in bank's gold reserves (F33) | domestic money supply (E51) |