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War and Inflation in the United States from the Revolution to the First Iraq War

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  • Hugh Rockoff

    () (Department of Economics Rutgers University)

Abstract

The institutional arrangements governing the creation of money in the United States have changed dramatically since the Revolution. Yet beneath the surface the story of wartime money creation has remained much the same. During wars against minor powers, the government was able to fund the war by borrowing and levying taxes. In major wars, however, there came a point when further increases in taxes could not be undertaken for administrative or political reasons, and further increases in borrowing could not be undertaken except at higher interest rates; rates that exceeded what was considered fair based on prewar norms. At those moments governments turned to the printing press. The result was substantial inflation.

Suggested Citation

  • Hugh Rockoff, 2015. "War and Inflation in the United States from the Revolution to the First Iraq War," Departmental Working Papers 201516, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:201516
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    References listed on IDEAS

    as
    1. Calomiris, Charles W., 1988. "Institutional Failure, Monetary Scarcity, and the Depreciation of the Continental," The Journal of Economic History, Cambridge University Press, vol. 48(01), pages 47-68, March.
    2. Grubb, Farley, 2008. "The Continental Dollar: How Much Was Really Issued?," The Journal of Economic History, Cambridge University Press, vol. 68(01), pages 283-291, March.
    3. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    war; inflation;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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