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The Financial Market and Government Debt Policy in France, 1746–1793

Published online by Cambridge University Press:  03 March 2009

François R. Velde
Affiliation:
Ph.D. candidate in Economics at Stanford University, Stanford, CA 94305.
David R. Weir
Affiliation:
Associate Professor of Economics, Yale University, New Haven, CT 06520.

Abstract

This article offers a new quantitative history of the market for government debt in France before the Revolution. The monarchy was a persistent default risk because of institutional obstacles to raising taxes. Default followed observable rules in targeting specific assets. The financial market reflected both facts: interest rates were high on the safest assets and ranged higher on the most likely default targets. The cost of all forms of new borrowing became substantially higher than the yields on old debt, resulting in increasing government reliance on expensive life annuities.

Type
Articles
Copyright
Copyright © The Economic History Association 1992

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