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Why didn't France follow the British Stabilization after World War One ?

Author

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  • Michael D. Bordo
  • Pierre-Cyrille Hautcoeur

Abstract

We show that the size of the French public debt, the budget deficit and the monetary overhang made it impossible to stabilize immediately after World War I, even on the anti-keynesian assumption that a stabilization would have had no negative effects on income. The reason for the immediate postwar inflation was then not mismanaged policy but a wise choice in the French context; nevertheless, a stabilization was historically possible from early 1924, and it would likely have benefited not only France but the entire international monetary system.

Suggested Citation

  • Michael D. Bordo & Pierre-Cyrille Hautcoeur, 2003. "Why didn't France follow the British Stabilization after World War One ?," DELTA Working Papers 2003-15, DELTA (Ecole normale supérieure).
    • Handle: RePEc:del:abcdef:2003-15
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    Citations

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    2. Michael D. Bordo, 2017. "An Historical Perspective on the Quest for Financial Stability and the Monetary Policy Regime," Economics Working Papers 17108, Hoover Institution, Stanford University.
    3. Krystian Bua & Giovanni Dosi & Maria Enrica Virgillito, 2025. "The finance-growth nexus over the long-run," LEM Papers Series 2025/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Eric M. Leeper & Todd B. Walker, 2012. "Perceptions and Misperceptions of Fiscal Inflation," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 255-299, National Bureau of Economic Research, Inc.
    5. Michael D. Bordo & Mickey D. Levy, 2020. "Do Enlarged Fiscal Deficits Cause Inflation: The Historical Record," NBER Working Papers 28195, National Bureau of Economic Research, Inc.
    6. Leeper, E.M. & Leith, C., 2016. "Understanding Inflation as a Joint Monetary–Fiscal Phenomenon," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2305-2415, Elsevier.
    7. Gardner, Leigh, 2015. "The curious incident of the franc in the Gambia: exchange rate instability and imperial monetary systems in the 1920s," Financial History Review, Cambridge University Press, vol. 22(3), pages 291-314, December.
    8. Antoine Parent & Pierre-Charles Pradier, 2022. "A la Recherche du Temps Perdu : Legal and Quantitative analysis of the First Documented Option Market - Paris 1844-1939," Sciences Po Economics Publications (main) halshs-03815575, HAL.
    9. Michael D. Bordo & Mickey D. Levy, 2021. "Do enlarged fiscal deficits cause inflation? The historical record," Economic Affairs, Wiley Blackwell, vol. 41(1), pages 59-83, February.
    10. Campbell Leith & Eric Leeper, 2016. "Understanding Inflation as a Joint Monetary-Fiscal Phenomenon," Working Papers 2016_01, Business School - Economics, University of Glasgow.
    11. Kirsten Wandschneider & Nikolaus Wolf, 2010. "Shooting on a moving target: explaining European bank rates during the interwar period," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 2(1/2), pages 31-48.

    More about this item

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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