samlet årgang - Økonomisk Institut - Københavns Universitet

Nationaløkonomisk Tidsskrift 143 (2005): 153-167
Interest-Rate Development in
Denmark 1875-2003 – A Survey
Kim Abildgren
Danmarks Nationalbank, E-mail: kpa@nationalbanken.dk
SUMMARY: This article paints a broad picture of the interest-rate development in
Denmark since 1875. Three different short-term interest-rate series (the official discount
rate, the private banks' average deposit rate, and the market rate of discount/
money market rate) and two different long-term interest-rate series (the government
bond yield and the yield on mortgage-credit bonds) are constructed and some »stylised
facts« about the development in real interest rates are presented and discussed.
1. Introduction
The existence of financial markets and financial instruments facilitates an efficient
allocation of savings from economic agents with a savings surplus to economic agents
with savings deficits. Although legal regulations and other institutional factors, to a
certain and time-varying degree, have influenced the allocation process, nominal and
real interest rates have always played a crucial role for both real investments and financial
portfolio decisions.
This article paints a broad picture of the interest-rate development in Denmark since
the introduction of the krone as the Danish currency unit in 1875, where Denmark also
changed her monetary standard from silver to gold. Furthermore, some »stylised
facts« about the development in real interest rates in Denmark are presented and discussed.
1
The structure of the article is as follows: Section 2 presents the development in
Danish interest rates and inflation since 1875. Section 3 explores the development in
different measures of real interest rates and looks at inflation expectations, while section
This article is based on the work presented in Abildgren (2005). The author is grateful to the editor of this
journal and two anonymous referees, whose comments and suggestions have improved the article in the review
process. Furthermore, the author wishes to thank colleagues from Danmarks Nationalbank for useful
comments. Views and conclusions expressed in this article are those of the author and do not necessarily
represent those of Danmarks Nationalbank. The author alone is responsible for any remaining errors.
1. For other long-span studies of interest-rate development in Denmark, one may refer to Andersen (ed.)
(1947), Christiansen and Lystbæk (1994), Møller and Topp (2003), Nielsen and Risager (2001), Oldam
(1963), Parum (1999a), Parum (1999b), Pedersen (1930), Statistics Denmark (1969) and Sørensen (1995).
For broad studies on the international development in interest rates covering the period since 1875, one may
refer to e.g. Bordo and Jonung (1997) and Homer and Sylla (1996).