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

Author

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  • Velde, François R.
  • Weir, David R.

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.

Suggested Citation

  • Velde, François R. & Weir, David R., 1992. "The Financial Market and Government Debt Policy in France, 1746–1793," The Journal of Economic History, Cambridge University Press, vol. 52(1), pages 1-39, March.
    • Handle: RePEc:cup:jechis:v:52:y:1992:i:01:p:1-39_01
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    Cited by:

    1. Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013. "Waterloo: a Godsend for French Public Finances?," Working Papers 0041, European Historical Economics Society (EHES).
    2. repec:spo:wpecon:info:hdl:2441/687 is not listed on IDEAS
    3. Crettez, Bertrand & Deffains, Bruno & Musy, Olivier & Tallec, Ronan, 2020. "State Capacity, Legal Design and the Venality of Judicial Offices," MPRA Paper 105009, University Library of Munich, Germany.
    4. Mauro Guillén & Adrian Tschoegl, 2002. "Banking on Gambling: Banks and Lottery-Linked Deposit Accounts," Journal of Financial Services Research, Springer;Western Finance Association, vol. 21(3), pages 219-231, June.
    5. Daudin, Guillaume, 2004. "Profitability of Slave and Long-Distance Trading in Context: The Case of Eighteenth-Century France," The Journal of Economic History, Cambridge University Press, vol. 64(1), pages 144-171, March.
    6. repec:hal:spmain:info:hdl:2441/687 is not listed on IDEAS
    7. Jaaidane, Touria & Musy, Olivier & Tallec, Ronan, 2022. "Rent-seeking, Reform and Conflict: French Parliaments at the End of the Ancien Régime," MPRA Paper 112067, University Library of Munich, Germany.
    8. Touria Jaaidane & Olivier Musy & Ronan Tallec, 2023. "Rent-seeking, reform, and conflict: French parliaments at the end of the Old Regime," Public Choice, Springer, vol. 194(3), pages 249-275, March.
    9. Elaine Hutson, 2012. "The Evolution of the Managed Funds Industry: Investment Trusts in Nineteenth-century Britain," Chapters, in: Geoffrey Poitras (ed.), Handbook of Research on Stock Market Globalization, chapter 5, Edward Elgar Publishing.
    10. Leonor Freire Costa & Susana Münch Miranda, 2023. "Reputational recovery under political instability: Public debt in Portugal, 1641–83," Economic History Review, Economic History Society, vol. 76(3), pages 871-891, August.
    11. Bertrand Crettez & Bruno Deffains & Olivier Musy & Ronan Tallec, 2024. "Judicial Venality: A Rational Choice Analysis," Working Papers AFED 24-05, Association Francaise d'Economie du Droit (AFED).
    12. Chilosi, David, 2014. "Risky Institutions: Political Regimes and the Cost of Public Borrowing in Early Modern Italy," The Journal of Economic History, Cambridge University Press, vol. 74(3), pages 887-915, September.
    13. Poitras, Geoffrey, 2024. "More on the Origin of Financial Economics: Early Contributions to Joint Life Annuity Valuation," SocArXiv ak6gu, Center for Open Science.
    14. Sutcliffe, Charles, 2015. "Trading death: The implications of annuity replication for the annuity puzzle, arbitrage, speculation and portfolios," International Review of Financial Analysis, Elsevier, vol. 38(C), pages 163-174.
    15. Guillaume Daudin, 2003. "Do Frontiers give of do frontiers take ? The case of intercontinental trade in France at the end of the Ancien Régime," Documents de Travail de l'OFCE 2003-03, Observatoire Francais des Conjonctures Economiques (OFCE).
    16. repec:spo:wpmain:info:hdl:2441/687 is not listed on IDEAS
    17. Alberto Feenstra, 2015. "Circumventing credible commitment: GroningenÕs default and the Dutch RepublicÕs federal escape route, 1666-1761," Working Papers 0075, Utrecht University, Centre for Global Economic History.
    18. Sargent, Thomas J & Velde, Francois R, 1995. "Macroeconomic Features of the French Revolution," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 474-518, June.
    19. repec:hal:wpspec:info:hdl:2441/687 is not listed on IDEAS
    20. Eugene N. White, 2004. "From privatized to government‐administered tax collection: tax farming in eighteenth‐century France," Economic History Review, Economic History Society, vol. 57(4), pages 636-663, November.
    21. Harold James, 2013. "Growing Stronger: What Way Out for Europe?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(3), pages 35-43, October.
    22. Stephen Quinn, 2008. "Securitization of Sovereign Debt: Corporations as a Sovereign Debt Restructuring Mechanism in Britain, 1694-1750," Working Papers 200701, Texas Christian University, Department of Economics.
    23. Vesperoni , Alberto, 2013. "War Finance and the Modern State," NEPS Working Papers 6/2013, Network of European Peace Scientists.
    24. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.
    25. Christoph Wegener & Tobias Basse & Frederik Kunze & Hans-Jörg von Mettenheim, 2016. "Oil prices and sovereign credit risk of oil producing countries: an empirical investigation," Quantitative Finance, Taylor & Francis Journals, vol. 16(12), pages 1961-1968, December.

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