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Fiscal Discriminations in Three Wars

Author

Listed:
  • George J. Hall

    () (Economics Department, Brandeis University)

  • Thomas J. Sargent

    () (New York University)

Abstract

In 1790, a U.S. paper dollar was widely held in disrepute (something shoddy was not ‘worth a Continental’). By 1879, a U.S. paper dollar had become ‘as good as gold.’ These outcomes emerged from how the U.S. federal government financed three wars: the American Revolution, the War of 1812, and the Civil War. In the beginning, the U.S. government discriminated greatly in the returns it paid to different classes of creditors; but that pattern of discrimination diminished over time in ways that eventually rehabilitated the reputation of federal paper money as a store of value.

Suggested Citation

  • George J. Hall & Thomas J. Sargent, 2013. "Fiscal Discriminations in Three Wars," Working Papers 56, Brandeis University, Department of Economics and International Businesss School.
  • Handle: RePEc:brd:wpaper:56
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    File URL: http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP56.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Max Gillman & Michal Kejak & Giulia Ghiani, 2014. "Money, Banking and Interest Rates: Monetary Policy Regimes with Markov-Switching VECM Evidence," CEU Working Papers 2014_3, Department of Economics, Central European University.
    2. Pablo D'Erasmo & Enrique G. Mendoza, 2016. "Distributional Incentives In An Equilibrium Model Of Domestic Sovereign Default," Journal of the European Economic Association, European Economic Association, vol. 14(1), pages 7-44, February.
    3. repec:bla:manchs:v:85:y:2017:i::p:1-32 is not listed on IDEAS
    4. Pablo D'Erasmo & Enrique Mendoza, 2011. "Optimal Domestic (and External) Sovereign Default," PIER Working Paper Archive 16-019, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 04 Aug 2016.
    5. Velde, Francois R., 2016. "What We Learn from a Sovereign Debt Restructuring in France in 1721," Economic Perspectives, Federal Reserve Bank of Chicago, issue 5, pages 1-17.
    6. E. Mengus, 2014. "International Bailouts: Why Did Banks' Collective Bet Lead Europe to Rescue Greece?," Working papers 502, Banque de France.
    7. Pablo D'Erasmo & Enrique G. Mendoza, 2016. "Optimal Domestic (and External) Sovereign Default," NBER Working Papers 22509, National Bureau of Economic Research, Inc.
    8. Enrique Mendoza, 2015. "EconomicDynamics Interviews Enrique Mendoza on Sovereign Debt," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 16(1), April.
    9. Ohanian, Lee E., 2014. "The impact of monetary policy in the midst of big shocks," Journal of Economic Dynamics and Control, Elsevier, vol. 49(C), pages 35-48.
    10. Demian Pouzo & Ignacio Presno, 2015. "Optimal Taxation with Endogenous Default under Incomplete Markets," Papers 1508.03924, arXiv.org, revised May 2016.
    11. Schelkle, Waltraud, 2017. "Hamilton’s Paradox Revisited: Alternative lessons from US history," CEPS Papers 12963, Centre for European Policy Studies.
    12. repec:eee:macchp:v2-2305 is not listed on IDEAS
    13. Jonathan Stone & Jeffrey Wagner, 2016. "Fairness and efficiency in US Revolutionary War takings and post-war debt redemption," Constitutional Political Economy, Springer, vol. 27(4), pages 399-417, December.
    14. Giulia Ghiani & Max Gillman & Michal Kejak, 2014. "Money, Banking and Interest Rates: Monetary Policy Regimes with Markov-Switching VECM Evidence," Working Papers 1003, University of Missouri-St. Louis, Department of Economics.
    15. repec:eee:macchp:v2-2493 is not listed on IDEAS

    More about this item

    Keywords

    Repudiation; Reputation; Discrimination; Legal tender; Greenbacks; Alexander Hamilton; Albert Gallatin; Ulysses S. Grant;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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