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Interest Rates

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Handbook of Cliometrics

Abstract

Many influential cliometric studies have examined interest rates in order to assess the investment efficiency, the integration of markets, the economic effects of changes in policies or institutions, the sources of macroeconomic cycles, and so on. The common feature of this approach to economic history is that it is based on the crucial assumption that interest rates are the market prices at which demand meets supply. In this perspective, most debates focus on how to calculate yields or compare different rates of return on capital. Cliometricians developed innovative methods to construct yields and lending rates that were not specified in historical sources. It is only quite recently that economic historians have turned to cases where interest rates are not market-clearing prices. In such cases, there is little connection between interest rates and the state of the economy. Highlighting market imperfections, some recent studies have challenged earlier historical interpretations that overlooked the potential disconnection between prices (interest rates) and quantities. They offer new insights into the historical functioning of credit markets, central banking, and government intervention in financial systems.

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Notes

  1. 1.

    Due to space limitations, many important articles on the subject had to be left out. Therefore, this survey should not be seen as an attempt to fully discuss the most recent work on this issue. What I have tried to achieve is to present the widest possible variety of methods, to highlight the pioneering work of early cliometricians which have inspired many subsequent researchers, and to highlight and criticize the strong theoretical assumptions that were the basis for standard studies of interest rates by economic historians. Although an attempt has been made to paint a general picture of the work of cliometricians, this survey obviously reflects the author’s biases and research interests.

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Authors and Affiliations

  1. Banque de France, Paris School of Economics & CEPR, Paris, France

    Eric Monnet

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  1. Eric Monnet
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Correspondence to Eric Monnet .

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Editors and Affiliations

  1. BETA/CNRS (UMR 7522), University of Strasbourg Institute for Advanced Study, Strasbourg Cedex, France

    Claude Diebolt

  2. University of Wisconsin Department of Economics, La Crosse, WI, USA

    Michael Haupert

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Monnet, E. (2019). Interest Rates. In: Diebolt, C., Haupert, M. (eds) Handbook of Cliometrics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40458-0_51-1

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  • DOI: https://doi.org/10.1007/978-3-642-40458-0_51-1

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  • Print ISBN: 978-3-642-40458-0

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