Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209905
Authors: 
Øksendal, Lars Fredrik
Year of Publication: 
2008
Series/Report no.: 
Working Paper No. 2008/14
Publisher: 
Norges Bank, Oslo
Abstract: 
This essay examines Norwegian monetary policy under the final decades of the classical international gold standard regime prior to World War I. While the evidence clearly demonstrates that the commitment to gold convertibility was the overall objective, the character of monetary policy was determined by the inherent tension between Norges Bank's role as the guardian of the nation's most important reserve of foreign exchange and the role as manager of the domestic currency. In order to solve this tension, a core point of monetary policy was to shelter the domestic money supply from changes in the balance of payments. Rather than forcefully reducing domestic circulation during seasonal fluctuations in the flow of gold, Norges Bank operated with a relatively large reserve of notes and foreign securities which took the strain. The effect of this policy was interest rate smoothing and increased freedom for exercising discretionary judgment. Moreover, I present evidence demonstrating that interest rate decisions were influenced by a number of domestic concerns and not only the external balance.
Subjects: 
central banking
monetary history
gold standard
bank rate policy
JEL: 
E42
E52
E58
N13
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-453-6
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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