Assignats or death: The politics and dynamics of hyperinflation in revolutionary France

Bryan P. Cutsinger, Louis Rouanet and Joshua S. Ingber

European Economic Review, 2023, vol. 157, issue C

Abstract: Following a revolution precipitated by unsustainable government deficits, an explosion of paper money called the assignat caused a rapid increase in prices not seen in Europe again until the widespread adoption of discretionary fiat standards in the 20th century. The value of the assignat depended on the property the revolutionary government had expropriated to back it. The decision to retire the assignats from circulation using the revenue collected from the sale of the expropriated property was ultimately a political one. We examine how shifts in the political equilibrium affected the demand for the assignat and find evidence of two money demand shocks that correspond to the collapse of the political support for the assignats. Our estimates of the demand for the assignat indicate that the first shock reduced the demand for real balances by up to 70%. The second shock caused the negative relationship between real balances and inflation to break down entirely. Our results point to politics’ critical role in determining a currency’s fiscal backing and, thus, the demand for money.

Keywords: Political economy; Inflationary finance; French revolution (search for similar items in EconPapers)
JEL-codes: D72 E31 N13 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292123001393
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:157:y:2023:i:c:s0014292123001393

DOI: 10.1016/j.euroecorev.2023.104510

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().