The Determinants of the Discount Rate in Italy, 1876-1913: An Empirical and Documentary Analysis

Abstract

There are very few studies of the behaviour of the Italian discount rate under the gold standard. This essay investigates the problem first by estimating some simple models of the discount rate, using monthly and annual time series, and then with a documentary analysis. The main finding is that the Italian discount rate depended above all on the internal liquidity ratio and, only in the periods of full convertibility of the lira, on the English discount rate. Confirming one finding of previous non-quantitative studies, the estimates also show that the Italian monetary authorities made a far less intense use of interest rate changes than those of the other countries of the system.

Note: Downloadable document is in Italian.

JEL Classification: F31, E44, C32