Why Didn't France Follow the British Stabilization after World War One?

39 Pages Posted: 25 Jul 2003 Last revised: 22 Aug 2003

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Pierre-Cyrille Hautcoeur

Paris School of Economics

Date Written: July 2003

Abstract

We show that the size of the public debt, the budget deficit and the monetary overhang made it impossible for France to stabilize its price level and return to the pre-war parity immediately after World War I, even on the anti-keynesian assumption that a stabilization would not have had any negative effects on real income. The reason for the immediate postwar inflation then was not mismanaged policy but a wise choice in the French context. Nevertheless, a stabilization at a devalued franc which would have been substantially higher than the rate achieved by Poincar‚‚ in 1926 was historically possible in early 1924, and it would likely have benefited not only France but the entire international monetary system.

Suggested Citation

Bordo, Michael D. and Hautcoeur, Pierre-Cyrille, Why Didn't France Follow the British Stabilization after World War One? (July 2003). NBER Working Paper No. w9860. Available at SSRN: https://ssrn.com/abstract=425596

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pierre-Cyrille Hautcoeur

Paris School of Economics ( email )

48, Boulevard Jourdan
Paris, 75014
France
(33 1) 44 32 21 36 (Phone)
(33 1) 44 32 21 23 (Fax)

HOME PAGE: http://www.pse.ens.fr/hautcoeur/index.html

Register to save articles to
your library

Register

Paper statistics

Downloads
30
Abstract Views
997
PlumX Metrics