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Journal Article
Do sterilized interventions affect exchange rates?
Journal Article
Banking instability and regulation in the U.S. free banking era
Report
The Free Banking Era: new evidence on laissez-faire banking
The purpose of this paper is to begin a reevaluation of the Free Banking Era by developing and examining individual bank information on the population of banks which existed under the free banking laws in four states. This information allows us to determine the number of free banks which failed and to estimate the resulting losses to their note holders. While the new evidence suggests there were problems with free banking, it presents a serious challenge to the prevailing view that free banking led to financial chaos.
Journal Article
Explaining the demand for free bank notes
Report
Output variability in an open-economy macro model with variance-dependent parameters
This paper analyzes the variability of output under money supply and exchange rate rules in an open economy in which the slope of the aggregate supply curve depends on the variances of aggregate demand and market-specific innovations. It demonstrates that results regarding the dominance of one rule over the other when the slope of the aggregate supply curve is constant are reversed when the slope of the aggregate supply curve depends on the variances of innovations and these variances are sufficiently large.
Journal Article
Resolving the national bank note paradox
During the 1882_1914 period, U.S. national banks could issue circulating notes backed by specified government securities. Earlier attempts to explain yields on those securities by costs of note issue discovered a paradox: yields were too high. We point out two previously ignored sources of costs: idle notes and note redemptions that were highly variable, thereby exacerbating the problem of managing reserves. We present data on idle notes and estimate, from partial data on redemptions, the uncertainty due to redemptions. We also present a semiannual time series of an upper bound on the average ...
Journal Article
Free banking, wildcat banking, and shinplasters
Journal Article
The Suffolk Bank and the Panic of 1837
The Suffolk Bank in Boston is well known as having been the clearinghouse for virtually all the banknotes that circulated in New England between 1836 and 1858. An examination of 19th century bank balance sheets shows that during and after the U.S. banking Panic of 1837, this private commercial bank also provided some services that today are provided by central banks. These include lending reserves to other banks (providing a discount window) and keeping the payments system operating. Because of Suffolk's activities, banks in New England fared better than banks elsewhere during the Panic of ...
Report
A model of commodity money with minting and melting
We construct a random matching model of a monetary economy with commodity money in the form of potentially different types of silver coins that are distinguishable by the quantity of metal they contain. The quantity of silver in the economy is assumed to be fixed, but agents can mint and melt coins. Coins yield no utility, but can be traded. Uncoined silver yields direct utility to the holder. We find that optimal coin size increases with the probability of trade and with the stock of silver. We use these predictions of our model to analyze the coinage decisions of the monetary authorities in ...
Report
Online Appendix for: International Evidence on Long-Run Money Demand
This appendix supports Staff Report 587. An earlier version of this Staff Report circulated as Working Paper 738.