Consumer prices in Denmark 1502–2007

Abstract

The article presents a consumer price index for Denmark 1502–2007 and discusses some of the more conceptual issues relating to compilation of historical price indices and measurement of inflation. For the post-1815 period, the consumer prices index (CPI) is based on existing figures whereas new data have been constructed for the pre-1815 period. Due to limited data availability the CPI is based on ‘silver prices’ for the period 1502–1640. Since the Danish currency depreciated vis-à-vis silver during this period, the pre-1640 CPI figures clearly underestimate the actual level of inflation. Disregarding periods with actual war inflation and the deflation during the first two decades or so after the end of the Napoleonic Wars, there seems only to have been one major exception from the overall picture of price stability in the post-1640 period: the first four decades following the end of the Second World War where inflation expectations lost their anchor.

Keywords:

• inflation
• consumer prices index
• price history

JEL Classification:

• C43
• E31
• N13
• N14

Notes

1. The author is grateful to the editor of this journal and two anonymous referees, whose constructive comments and suggestions have been significant in helping to shape the article in the review process. Furthermore, the author wishes to thank colleagues from Danmarks Nationalbank for useful comments. Views and conclusions expressed in the article are those of the author and do not necessarily represent those of Danmarks Nationalbank. The author alone is responsible for any remaining errors and shortcomings.

2. Ø. Eitrheim, J.T. Klovland, and J. Qvigstad, eds., Historical Monetary Statistics for Norway 1819–2003 (Oslo: Norges Bank, 2004).

3. Ø. Eitrheim, J.T. Klovland, and J. Qvigstad, eds., Historical Monetary Statistics for Norway – Part II. (Oslo: Norges Bank, 2007).

4. O.H. Grytten, ‘A Consumer Price Index for Norway 1516–2003’, in Historical Monetary Statistics for Norway 1819–2003, ed. Ø. Eitrheim, J.T. Klovland, and J. Qvigstad. (Oslo: Norges Bank, 2004), 47–98.

5. R. Edvinsson, J. and Söderberg, ‘A Consumer Price Index for Sweden 1290–2006’ (paper presented at the Swedish Economic History conference, Stockholm, 12–14 October 2007).

6. Available at the website of Statistics Denmark (www.dst.dk).

7. Quotation from §1.3 in ILO, IMF, OECD, Eurostat, United Nations and the World Bank, Consumer Price Index Manual: Theory and Practice (Hong Kong: ILO, 2004).

8. ILO et al., Consumer Price Index Manual offers a comprehensive exposition of a wide range of formulas and a discussion of their strengths and weaknesses seen in a theoretical as well as a practical perspective.

9. A geometric average at this stage of the calculations is also in line with the recommendation in ILO et al., Consumer Price Index Manual.

10. S. Aa. Hansen, Økonomisk vækst i Danmark. Bind II: 1914–1983 (3rd ed.) (Copenhagen: Akademisk Forlag, 1983).

11. W. Scharling, Pengenes synkende Værdi belyst ved danske Aktstykker samt ledsaget af en kort Udsigt over den danske M⊘nthistorie (Copenhagen: Gads Forlag 1869) and J. Wilcke. Daler, Mark og kroner 1481–1914 (Copenhagen: GAD, 1931).

12. Pages 236–237 in Scharling, Pengenes synkende Værdi.

13. With the peace settlement in Kiel in January 1814, Norway became independent of Denmark after more than 400 years of union.

14. Schleswig and Holstein were attached to the Danish monarchy in 1460 but became part of Germany after the Second Schleswig War in 1864. In June 1920, S⊘nderjylland (the northern part of the old Duchy of Schleswig) was reunited with Denmark after a referendum in accordance with the Versailles Treaty.

15. Skåne, Halland and Blekinge were lost to Sweden following the end of the First Karl Gustav War in 1658. Iceland became a sovereign state in personal union with Denmark in 1918. The personal union between Denmark and Iceland ceased in 1944.

16. W. Scharling, Pengenes synkende Værdi; and V. Falbe-Hansen, Hvilke Forandringer er der siden Amerikas Opdagelse foregaaet i Priserne paa Danmarks væsentlige Frembringelser og i Arbeidsl⊘nnen her i Landet, og hvilken Del kan der tilskrives de ædle Metallers Mængde i disse Forandringer? En statistisk Unders⊘gelse. (Copenhagen: I. Cohens Bogtrykkeri, 1869).

17. On page 39 in Falbe-Hansen, Hvilke Forandringer, information on the prices of corn in 1467 is also stated. However, Falbe-Hansen notes that these prices – related to the payment of the 1467 tax – are probably fixed at a too low level in order to encourage payment of the tax in cash rather than in kind.

18. This assumption seems plausible. For the period 1660–1712, the correlation coefficient between the annual increases in corn prices in Sjællands Stift and Denmark as a whole was 0.95.

19. Statistics Denmark, Kapitelstakster i ældre og nyere tid, Statistiske meddelelser, No. 4,15,1, 1904.

20. Sjælland, Fyn, Aalborg, Viborg, Aarhus and Ribe.

21. E.g. A. Nielsen, Kapitelstakster i ældre og nyere Tid. Udg. af Statens Statistiske Bureau. Kbh. 1904, National⊘konomisk Tidsskrift, 42, (1904), 609–612 (review); and A. Nielsen, Dänische Preise 1650–1750, Jahrbüchern für Nationalökonomie und Statistik, Dritte Folge, 31, (1906): 289–347.

22. D.A. Andersen and E.H. Pedersen, A History of Prices and Wages in Denmark 1660–1800. Volume II: Prices and Wages in Danish Estate Accounts. (Copenhagen: Schultz, 2004).

23. On Zealand: Giesegaard, Bregentved, Gisselfeld, Herlufsholm, Holsteinborg, Fuirendal, Sor⊘, L⊘venborg, Gaun⊘ and Juellinge. On Funen: Taasinge, Frederiksgave and Erholm. In Jutland: Frijsenborg, Fussings⊘, St⊘vringgaard, St⊘vringgaard household accounts, Lindenborg and Odden.

24. Transactions involving payment in kinds (e.g. manorial dues) are excluded.

25. A. Friis and K. Glamann, A History of Prices and Wages in Denmark 1660–1800. Volume I. (London: Longmans, 1958).

26. P. Thestrup, The Standard of Living in Copenhagen 1730–1800. (Copenhagen: GAD's Forlag, 1971).

27. The bakers normally adjusted the weight of different kinds of bread in line with fluctuation in the corn prices in order to make a profit when they had to sell bread at the officially fixed prices. However, the price series for bread in Friis & Glamann, op.cit. are calculated for bread of a fixed weight.

28. All average annual growth rates presented in this article are compound growth rates.

29. G.V. Mogensen, Historie og ⊘konomi (Copenhagen: Akademisk Forlag, 1987); O. Hyldtoft, Ul⊘ste problemer i danske historiske nationalregnskaber, National⊘konomisk tidsskrift 132 (1994): 92–102; J.P. Christensen, R. Hjerppe, O. Krantz, and C.-A. Nilsson, Nordic Historical National Accounts since the 1880s, Scandinavian Economic History Review, XLIII (1995), 30–52; C.-A. Nilsson, Er der behov for et HND?, Historisk Tidsskrift 91 (1991): 218–26; and C.-A. Nilsson, LAMEJSLA. Nye serier for landbrug og landbrugsindustri i de danske historiske nationalregnskaber 1900–1947, Historisk Tidsskrift 104 (2004): 229–41.

30. If the creditor called the loan. Kurant-denominated central-government debt could be converted at the ratio 1:1 if the creditor was willing to declare the bond irredeemable and accept a certain cut in interest-rate payments.

31. Another reason for the nickname the ‘bankruptcy of the state’ was the fact that the Kurantbank had been owned by the central government since 1773. The Danish monetary reform in 1813 is described in more details in e.g. S.Aa. Hansen and K.E Svendsen, Dansk pengehistorie 1700–1914 (Copenhagen: Danmarks Nationalbank, 1968); and S.Aa. Hansen, ‘Pengereformen 1813 – holdninger og vurderinger’, in Presse og historie. Festskrift til Niels Thomsen, ed. O. Feldbæk and E. Lund. (Odense: Odense Universitetsforlag, 1990), 69–75.

32. Statistics Denmark, Kapitelstakster.

33. Sjælland, Bornholm, Fyn, Lolland-Falster, Aalborg, Viborg, Aarhus and Ribe.

34. Data for Ribe Stift are also quoted in rigsbankdaler in 1812.

35. Hansen, Økonomisk vækst.

36. Hansen, Økonomisk vækst.

37. J. Pedersen, Arbejdsl⊘nnen i Danmark under skiftende konjunkturer i perioden ca. 1850–1913 (Copenhagen: Nordisk Forlag, 1930).

38. K. Dalgaard, Arbejderklassens ⊘konomiske kaar i Danmark i de sidste 50 aar, National⊘konomisk Tidsskrift 64 (1926): 105–216.

39. Pedersen, Arbejdsl⊘nnen i Danmark.

40. Cf. the documentation in Statistics Denmark, Indeksberegninger i Danmarks Statistik. (Copenhagen: Statistics Denmark, 1985); and Statistics Denmark, Forbruger- og nettoprisindekset. Dokumentation. (Copenhagen: Statistics Denmark, 2004).

41. Grytten, A Consumer Price Index; and J. Qvigstad, 500 years of price history: Price stability is the norm. What distinguishes the abnormal?, Norges Bank Staff Memo, No. 7, 2005.

42. Edvinsson and Söderberg, A Consumer Price Index for Sweden.

43. Brown and Hopkins, Seven Centuries of the Prices of Consumables; and G. Clark, ‘The Condition of the Working Class in England, 1209–2004’, Journal of Political Economy 113, no. 6 (2005): 1307–40.

44. E.g. J.L. Van Zanden, ‘Wages and the Standard of Living in Europe, 1500–1800’, European Review of Economic History, 2, (1999): 175–97; R.C. Allen, ‘The Great Divergence in European Wages and Prices from the Middle Ages to the First World War’, Explorations in Economic History 38 (2001): 411–47; and S. Pamuk, ‘Urban Real Wages around the Eastern Mediterranean in Comparative Perspective, 1100–2000’, Research in Economic History 23 (2005): 209–28.

45. Page 12 in Edvinsson and Söderberg, A Consumer Price Index for Sweden.

46. Cf. e.g. the brief surveys in C.P. Kindleberger, A Financial History of Europe, Second Edition. (Oxford: Oxford University Press, 1993); and G. Davies, A History of Money From Ancient Times to the Present Day, (3rd rev. ed.). (Cardiff: University of Wales Press, 2002).

47. Pages 84–85 in S.Aa. Hansen, Adelsvældens grundlag. (Copenhagen: GAD's Forlag, 1964).

48. Page 86 in Hansen, Adelsvældens grundlag.

49. Calculated on the basis of J. Wilcke, M⊘ntvæsenet under Christian IV og Frederik III i tidsrummet 1625–1670. (Copenhagen: Numismatisk Forenings Forlag, 1924).

50. In the period 1672–1736, the average depreciation of kurantdaler vis-à-vis silver amounted to around 0.3 per cent per annum calculated on the basis of Friis & Glamann, A History of Prices and Wages; and J. Wilcke, Specie-, Kurant- og Rigsbankdaler. M⊘ntvæsenets sammenbrud og genrejsning 1788–1845 (Copenhagen: GAD's Forlag, 1929).

51. The official name of the bank was ‘Den Ki⊘benhavnske Assignation-, Vexel- og Laane-Banqve’. The history of the Kurantbank is covered by E. Rasmussen, Kurantbankens forhold til staten 1737–73 (Copenhagen: Det Danske Forlag, 1955).

52. The Hamburg banco was not a coin but simply a specifically defined amount of fine silver.

53. At the same time the Kurantbank was closed for new business activities. The circulating amount of Kurantbank notes was not to be increased, and the Kurantbank notes were planned to be gradually withdrawn from circulation during a period of 20 years.