Jan Tore Klovland

Tax Evasion and the Demand for Currency in Norway and Sweden. Is There a Hidden Relationship

Variables associated with the level of hidden economic activity are examined in terms of their effects on the demand for currency in Norway and Sweden. Aggregate time series of marginal tax rates are compiled for this purpose. No such effects are evident for Norway, while in the case of Sweden the demand for currency was found to be significantly related to marginal tax rates. These estimates are then used as a basis for deriving an estimate of the size of the hidden economy in Sweden. An analysis of the assumptions underlying this procedure shows that the uncertainty involved in applying the currency approach to measuring the size of the hidden economy is so great as to make it hazardous to rely on such estimates.

Pitfalls in the Estimation of the Yield on British Consols, 1850–1914

Five pitfalls commonly encountered in estimating the yield on British Consols are identified and discussed herein. The most difficult question is whether Consol prices in the later 1890s reflected expectations of a conversion of the Consol stock in 1923. This is equivalent to asking whether security markets in the 1890s regarded the then extremely low interest rates to be a temporary or permanent phenomenon. Predictions from estimated equations for the yield spread between other high-class investments and Consols are used to determine this question. A corrected monthly series of the yield on Consols between 1850 and 1914 is presented.

Commodity market integration 1850–1913: Evidence from Britain and Germany

In a sample that contains annual prices of 39 selected commodities in Britain and Germany in the period 1850 to 1913 substantial evidence of well integrated commodity markets is found. The degree of integration is not universal across markets and varies over time, however. Absolute price variability was in general decresing over the period, indicating more closely integrated markets. But the reintroduction of tariffs in Germany beginning in 1879 implied that this trend was broken for a number of commodities.

Shaken or Stirred? Financial Deregulation and the Monetary Transmission Mechanism in Norway

We address the issue of how the deregulation of financial markets has affected the monetary transmission mechanism in Norway. By estimating a dynamic system of money, credit, real income and inflation during a period of fundamental structural changes in monetary policy and financial markets we are able to present empirical evidence on the tenacity of the relationships between financial and real variables. We first investigate the stability of the long-run demand functions for money and credit by means of recursive techniques for cointegrated systems. The long-run relationships turn out to be surprisingly resilient in our model; the deregulation process does not cause any permanent shifts in the relationships between financial quantity variables, real economic activity and prices. Within a small simultaneous dynamic model of the Norwegian economy we find evidence for the credit view of the monetary transmission mechanism, as both credit and money exhibit strong and stable effects on aggregate demand.

Challenges for the Construction of Historical Price Indices: The Case of Norway, 1777-1920.

This paper reviews some methodological and practical problems encountered in the construction of historical price indices. The underlying data sets in such studies are often characterized by heterogenous and incomplete price series. It is shown that by using the repeat sales method for constructing the subindices for individual commodity groups some of the main problems can be overcome. The procedures are illustrated by material from the construction of monthly price indices for Norway from the year 1777 to 1920. The price indices shed new light on two great wartime in ationary episodes in Norway: 1807-1817 and 1913-1920. In spite of a 61-fold increase in the price level in the rst period and a 4-fold increase in the second, it is found that, after in ation had been brought under control, prices reverted to a level consistent with the purchasing power parity principle.

The decentralised central bank: regional bank rate autonomy in Norway, 1850-1892

Before 1893 the regional branches of Norges Bank set their own bank rates. We discuss how bank rate autonomy could be reconciled with the fixed exchange rate commitments of the silver and gold standard. Although the headquarters of the bank was in Trondhjem, we find that the Christiania branch played the key role in providing leadership in bank rate policy. Foreign interest rate impulses were important for bank rate decisions, but there was also some leeway for responding to idiosyncratic shocks facing the Norwegian economy.

The demand for money in secular perspective: The case of Norway, 1867–1980

Abstract This paper presents some evidence from Norwegian data on some of the long-standing empirical issues of money demand. The choice of a scale variable and the issue of simultaneous equations bias is subjected to some recently developed statistical tests. The outcome favours a permanent income model of money demand. No significant simultaneity bias was detected. Various specifications of explanatory variables, like the own yield on money, interest rates and price expectations as well as the issues of price level homogeneity and stability between subperiods are also considered in the paper.

New series for agricultural prices in London, 1770–1914

New annual series for the prices of major agricultural commodities sold in London markets between 1770 and 1914 are presented. These series are based on bimonthly observations drawn from newspaper market reports. The products covered are wheat, barley (grinding and malting), oats, potatoes, hay, butter, beef, mutton, and pork. Annual prices are calculated for both calendar and production years. The new series are compared to existing series.

A European-type Wage Equation from an American-style Labor Market: Evidence from a Panel of Norwegian Manufacturing Industries in the 1930s

Using a newly constructed panel of manufacturing industry data for interwar Norway, we estimate a long-run wage curve for the 1930s that has all the modern features of being homogeneous in prices, proportional to productivity, and having an unemployment elasticity of -0.1. This result is more typical of contemporary European than U.S. wage equations, even if the labour market in interwar Norway possessed distinctively more ‘American’ features than those associated with present-day European welfare states. We also present some new Monte Carlo evidence on the properties of the estimators used.

A chronology of cycles in real economic activity for Norway, 1867–1914

Abstract Business cycles, defined as “recurrent sequences of persistent and pervasive expansions and contractions in economic activities”1, have been a distinctive feature of the experience of capitalist countries as far back as our historical records on aggregate economic activity go. Indeed, Schumpeter maintained that “[a]nalyzing business cycles means neither more nor less than analyzing the economic process of the capitalist era … Cycles are not, like tonsils, separable things that might be treated by themselves, but are, like the beat of the heart, of the essence of the organism that displays them”.2