Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264635 
Authors: 
Year of Publication: 
2001
Series/Report no.: 
Working Paper No. 43
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
In 1867, the "Compromise" between Austria and Hungary laid the foundation of a single currency system with a common central bank. As in today's euroland, each part of the monarchy remained sovereign in fiscal matters. Moreover, the borrowing needs of both parts of the monarchy were quite large, since Austria and Hungary sought to promote their own economic development through government spending. Yet no 'fiscal stability pact' existed: the two countries could run deficits to the extent of the public's willingness to lend to them. They were thus only subjected to the discipline of the capital market. This paper documents the record of the Austro-Hungarian monetary union and shows how this discipline led to a process of increased power of the central bank.
Subjects: 
Credit channel
balance sheet channel
investment
panel data
JEL: 
D92
E22
C23
G31
G32
Document Type: 
Working Paper

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