Monetary and Fiscal Policy in England during the French Wars (1793-1821)

Pamfili Antipa and C. Chamley

Working papers from Banque de France

Abstract: The French Wars (1793-1815) exerted unprecedented pressures on Britain's fiscal and monetary policy settings. Policy makers had to constantly adjust the policy mix as events unfolded. This meant implementing monetary and fiscal policy innovations, such as the suspension of the gold standard and the instauration of Britain's first income tax. These adjustments signalled the government's commitment to undertake the necessary to win the war, without jeopardizing fiscal sustainability. Drawing on new hand-collected data, we also show that the Bank of England played an essential role in two successive phases of the war. The Bank granted ample liquidity to the domestic payment system, by discounting large amounts of private bills. It also financed the decisive phase of the wars by purchasing large amounts of public debt. The successful winding down of the balance sheet and the resumption of the gold standard influenced the Bank's policies and shaped the political and financial landscape for the century to come.

Keywords: Interactions between monetary and fiscal policies; central bank balance sheet; unconventional monetary policy; open market operations. (search for similar items in EconPapers)
JEL-codes: E58 E62 H63 N13 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2017
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:627

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