Budget deficits and money creation: Exploring their relation before Bretton Woods. Replication data.

PROJECT DESCRIPTION:

Replication package for “Budget deficits and money creation: Exploring their relation before Bretton Woods”, to be published in Explorations in Economic History (accepted December 2018).

Panel of seventeen countries from 1870 to 1938. Ten countries are sometimes-floaters before the WWI: Argentina, Bulgaria, Brazil, Chile, Greece, Italy, Japan, Portugal, Romania and Spain. Seven countries are never-floaters before the WWI: Canada, Finland, the Netherlands, Norway, Sweden, the UK and the USA. 

Equation8.dta (Stata format): Data of public budget, monetary base and nominal GDP.

Replication program Equation 8 offers a dynamic heterogeneous estimation of variations in the monetary base on the budget balance.  

Equation9.dta (Stata format): Data of variations in the monetary base,  real GDP per capita( in  1990 Geary-Khamis dollars), average of public spending level , standard deviation of public spending levels, ratio of debt to nominal GDP and number of cabinet changes per year.

Replication program Equation 9 offers a dynamic panel estimation of variations in the monetary base on the rest of variables.

Abstract of the paper: The sovereign debt crisis in the Eurozone has rekindled the use of the North-South (core-periphery) terminology to refer to the heterogeneity of countries belonging to the Economic and Monetary Union (EMU). In the gold standard literature, this geographical partition had already been employed to oppose the fiscal profligacy and subsequent problems of convertibility of southern countries against the fiscal probity and long convertibility records of their northern counterparts. We provide statistical evidence that the group of countries that, with available data for 1870-1938, exhibited convertibility problems during the classical gold standard, for this reason called the pre-WWI sometimes-floaters, shared a pattern of fiscal dominance. This finding for the sometimes-floaters (southern European and South American countries plus Japan) differs from the non-fiscal dominance pattern that we obtain for the pre-WWI never-floaters (northern Europe and North America countries) when the Great War and its aftermath years are omitted. We also show that the presence of fiscal dominance was partly due to the lower levels of tax efficiency and political stability in the South.