Working Paper: The role of Bank of England note issues amongst the causes of the Panic of 1825

 

State-of-the-Money-Market

“The state of the money market”. A cartoon from the Panic of 1825

I have recently finished the first draft of the paper I’ve been working on during my summer as a Fellow in Residence here at the Mises Institute, and would welcome any comments anyone might have on it.

This paper is based on the same research I did for my BSc Dissertation, but I have completely re-written it, with several new sections, almost entirely new graphs, and some new data and other evidence.

Abstract: Despite the fact that the Panic of 1825 was arguably Britain’s most severe economic crisis of the first half of the nineteenth century, many of the subsequent explanations of its causes have been briefly-stated and incomplete. The goal of this paper is to clarify and deepen the credit expansion explanation of the Panic put forth by certain prior studies. The clarification will be in emphasising that credit expansion after 1822 was significant specifically because it caused a decline in lending standards and borrowing costs, stimulating an unsustainable boom in long-term and risky investments. The deepening of the credit expansion explanation will be by an investigation of the significant and previously under-appreciated influence of Bank of England note issues on the extent to which the British banking system at large was able to expand credit in the years 1822-25, due to the legally privileged status of Bank of England notes.

Link to the paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3208923

I would be most grateful to hear any comments or suggestions you might have, before I eventually submit it for publication.

 

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