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Shadow interest rates in Stockholm and the integration of early financial markets, 1660–1685: was Heckscher right?1

Published online by Cambridge University Press:  31 May 2011

Rodney Edvinsson
Rodney Edvinsson
Affiliation:
Stockholm University, [email protected]
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Abstract

The decline of interest rates during the early modern period is considered an important factor in the subsequent rise of capitalist society. This article uses unique empirical material based on bills of exchange in Stockholm between 1660 and 1685 to estimate underlying ‘shadow interest rates’. It shows that annual rates ‘according’ to Stockholm were very high, mostly above 10 per cent, an indication of underdeveloped financial integration between Stockholm and the main European centres. There are also indications of a decline in these rates during the period studied, reflecting improved efficiency in Swedish financial markets.

Keywords

Swedenbill of exchangeinterest rateearly modern period

JEL classification

N13: Europe: Pre-1913 N23: Europe: Pre-1913
Type
Articles
Information
Financial History Review , Volume 18 , Issue 3 , December 2011 , pp. 309 - 329
Copyright
Copyright © European Association for Banking and Financial History e.V. 2011

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