《比较政治经济学》文献资料：Macroeconomic Features of the French.pdf_大学文库

FRENCH REVOLUTION 475 1688,Britain had reformed its institutions to allow it to raise enough taxes during peacetime to finance debts incurred in times of war, and France sustained institutions designed to constrain the king's revenues.Modernizing forces in France wanted to eliminate govern- ment defaults and to smooth taxes and strengthen France's govern- ment by enhancing its access to capital markets.When King Louis XVI acceded to the throne in 1774,he pledged to honor the Crown's debt commitments,and successive governments initiated fiscal re- forms to facilitate raising and smoothing taxes.Yet reform was un- even,and the pressure not to default outran the government's ability to raise taxes.This led to a run-up of debt and interest payments in the years preceding 1789.Rather than default again,the king called the Estates General to accelerate the reform process.I The National Assembly aggravated the debt problem by immedi- ately reducing taxes and by repurchasing many offices previously sold by the Old Regime.The government nationalized church properties and transformed the debt problem into a "privatization problem."It used the confiscated National Estates to administer a tax-backed money scheme by issuing notes acceptable at auctions of specific church properties.2 The government spent the notes for goods,ser- vices,and debt payments;auctioned some land on credit;and then burned the notes that were returned at the auctions.However,many notes remained in circulation,especially ones of small denomination. Specie left France for England and the rest of Europe.After two years of note issues,the supply of new currency rose to 70 percent of the pre-1789 stock of specie,and the price level rose about 30 percent.The tax-backed money scheme functioned adequately until a war broke out in 1792,which initially went badly for France.The government wanted more resources,so it divorced note issues from the land sales.The tax-backed money plan devolved into a fiat money scheme,causing real balances to drop and prices to rise quickly in early 1793 and threatening the base of the tax (the inflation tax) that was the government's lifeline.The Girondins bequeathed this situation to the Jacobins,who responded by imposing wage and price controls and a set of legal restrictions designed to boost the demand for assignats (a "guillotine-backed currency"scheme).As a result,real balances rose and the price level fell in the face of extraordinary issues of assignats,and the government raised immense revenues.In 1794,the war turned in France's favor,and the sense of emergency I Conklin (1993)asked:to those who trusted in prior arrangements,what is the difference between a "reform"and a"default"?Not much as far as we know. 2"Tax-backed"because the land underlying this "land-backed"scheme was acquired by confiscation

FRENCH REVOLUTION 475 1688, Britain had reformed its institutions to allow it to raise enough taxes during peacetime to finance debts incurred in times of war, and France sustained institutions designed to constrain the king's revenues. Modernizing forces in France wanted to eliminate government defaults and to smooth taxes and strengthen France's government by enhancing its access to capital markets. When King Louis XVI acceded to the throne in 1774, he pledged to honor the Crown's debt commitments, and successive governments initiated fiscal reforms to facilitate raising and smoothing taxes. Yet reform was uneven, and the pressure not to default outran the government's ability to raise taxes. This led to a run-up of debt and interest payments in the years preceding 1789. Rather than default again, the king called the Estates General to accelerate the reform process.1 The National Assembly aggravated the debt problem by immediately reducing taxes and by repurchasing many offices previously sold by the Old Regime. The government nationalized church properties and transformed the debt problem into a "privatization problem." It used the confiscated National Estates to administer a tax-backed money scheme by issuing notes acceptable at auctions of specific church properties.2 The government spent the notes for goods, services, and debt payments; auctioned some land on credit; and then burned the notes that were returned at the auctions. However, many notes remained in circulation, especially ones of small denomination. Specie left France for England and the rest of Europe. After two years of note issues, the supply of new currency rose to 70 percent of the pre-1789 stock of specie, and the price level rose about 30 percent. The tax-backed money scheme functioned adequately until a war broke out in 1792, which initially went badly for France. The government wanted more resources, so it divorced note issues from the land sales. The tax-backed money plan devolved into a fiat money scheme, causing real balances to drop and prices to rise quickly in early 1793 and threatening the base of the tax (the inflation tax) that was the government's lifeline. The Girondins bequeathed this situation to the Jacobins, who responded by imposing wage and price controls and a set of legal restrictions designed to boost the demand for assignats (a "guillotine-backed currency" scheme). As a result, real balances rose and the price level fell in the face of extraordinary issues of assignats, and the government raised immense revenues. In 1794, the war turned in France's favor, and the sense of emergency I Conklin (1993) asked: to those who trusted in prior arrangements, what is the difference between a "reform" and a "default"? Not much as far as we know. 2 "Tax-backed" because the land underlying this "land-backed" scheme was acquired by confiscation

476 JOURNAL OF POLITICAL ECONOMY diminished,making unenforceable the legal restrictions that had propped up the currency.The Jacobins fell in the summer of 1794, and the legal restrictions supporting the demand for assignats disap- peared along with the Terror.Then France experienced a hyperin- fation:real balances fell and prices exploded.The Directory adminis- tered the first classic hyperinflation in modern Europe until 1797, when it defaulted on two-thirds of the government's debt.Specie returned from England to France.In 1797,France returned to a specie standard and remained on it throughout the Napoleonic Wars. In 1797,Britain suspended convertibility with specie and did not reinstate it until 6 years after Napoleon had permanently left France.3 Macroeconomic Theories Coloring Our Observations Two macroeconomic ideas and three models of money inform our chronicle of events. Unpleasant arithmetic.-Government budget constraints and the arithmetic of compound interest impose restrictions on government deficits and debt.We use this arithmetic despite two difficulties.First, we have to assume that some commitment mechanism is available to support any sovereign borrowing.4 Second,when it is assumed that the government can borrow because it can commit to repay its debt, the government budget constraint alone imposes virtually no restric- tions on tax and expenditure processes (see Hansen,Roberds,and Sargent 1991).We obtain restrictions like those in Sargent and Wal- lace's (1981)"unpleasant arithmetic"only by arbitrarily putting an upper bound on the amount of government borrowing.Assertions that a fiscal crisis sparked the French Revolution hinge on positing a bound and on asserting that the French government was nearly hit- ting it. Sustainable plans.-Chari and Kehoe (1990)define a "sustainable" government plan to be one that enlists the self-interest of each group to implement its part when the time or the contingency comes for it to act."Reform"of the Old Regime was difficult precisely because its institutions were largely sustainable,as a sequence of French finance ministers from 1775 to 1789 discovered. Tax-backed or asset-backed models of the demand for currency.-These 3This summary is based on our reading of the historical record.Other readings include Stourm (1885),Marion (1914-21,vols.1-4),Harris(1930),Aftalion(1987), White (1989),Bordo and White (1991),and Brezis and Crouzet(1994). 4See Bulow and Rogoffs (1989)and Chari and Kehoe's (1993a)analyses of the severe limits on sovereign borrowing caused by the market's limited ability to punish sovereign defaults.See also Prescott(1977)and Manuelli (1988)

476 JOURNAL OF POLITICAL ECONOMY diminished, making unenforceable the legal restrictions that had propped up the currency. The Jacobins fell in the summer of 1794, and the legal restrictions supporting the demand for assignats disappeared along with the Terror. Then France experienced a hyperinflation: real balances fell and prices exploded. The Directory administered the first classic hyperinflation in modern Europe until 1797, when it defaulted on two-thirds of the government's debt. Specie returned from England to France. In 1797, France returned to a specie standard and remained on it throughout the Napoleonic Wars. In 1797, Britain suspended convertibility with specie and did not reinstate it until 6 years after Napoleon had permanently left France.3 Macroeconomic Theories Coloring Our Observations Two macroeconomic ideas and three models of money inform our chronicle of events. Unpleasant arithmetic.-Government budget constraints and the arithmetic of compound interest impose restrictions on government deficits and debt. We use this arithmetic despite two difficulties. First, we have to assume that some commitment mechanism is available to support any sovereign borrowing.4 Second, when it is assumed that the government can borrow because it can commit to repay its debt, the government budget constraint alone imposes virtually no restrictions on tax and expenditure processes (see Hansen, Roberds, and Sargent 1991). We obtain restrictions like those in Sargent and Wallace's (1981) "unpleasant arithmetic" only by arbitrarily putting an upper bound on the amount of government borrowing. Assertions that a fiscal crisis sparked the French Revolution hinge on positing a bound and on asserting that the French government was nearly hitting it. Sustainable plans. -Chari and Kehoe (1990) define a "sustainable" government plan to be one that enlists the self-interest of each group to implement its part when the time or the contingency comes for it to act. "Reform" of the Old Regime was difficult precisely because its institutions were largely sustainable, as a sequence of French finance ministers from 1775 to 1789 discovered. Tax-backed or asset-backed models of the demand for currency. -These 3This summary is based on our reading of the historical record. Other readings include Stourm (1885), Marion (1914-21, vols. 1-4), Harris (1930), Aftalion (1987), White (1989), Bordo and White (1991), and Brezis and Crouzet (1994). 4 See Bulow and Rogoff s (1989) and Chari and Kehoe's (1993a) analyses of the severe limits on sovereign borrowing caused by the market's limited ability to punish sovereign defaults. See also Prescott (1977) and Manuelli (1988)

FRENCH REVOLUTION 477 models describe accompanying fiscal arrangements through which new issues of paper money cause little or no inflation. Legal restrictions models of the demand for currency.-These models study how a government can tax its citizens by forcing them to hold paper money it is issuing to finance a deficit;they describe circum- stances in which large new issues of paper currency cause less infla- tion than would be expected if people were voluntarily holding the currency. Classical hyperinflation models along lines described by Cagan (1956).-These models describe circumstances in which rapidly issu- ing a paper currency causes prices to rise even faster than the quantity of currency. We use these theories first to shape our descriptions and second to interpret how the revolutionaries explained their actions.We docu- ment how the revolutionaries used elements of these theories in the debates that shaped the Revolution.Our double use of theories re- flects the rational expectations hypothesis that parts of a time-series model are used by the people within the model to guide their fore- casts and decisions.We interpret inflation during the Revolution in terms of a procession of regimes in which the"if"parts of the three types of monetary models are approximately fulfilled. II.Before the Revolution Even Absolute Monarchies Have Budget Constraints The immediate cause of the French Revolution was the fiscal crisis of 1788.For 70 years,France had confronted a sequence of similar crises,all stemming from its incomplete efforts to adopt fiscal policies that Britain had used since 1688. Figure I displays the ratio of debt service to fiscal revenues for France and Britain during the eighteenth century.The two series display the same pattern,increasing from very low values in 1689 to about 60 percent in 1789.The upward movements correspond to the major episodes of the "Second Hundred Years'War"between Britain and France:the Nine Years'War of 1688-97,the Spanish Succession War of 1701-14,the Austrian Succession War of 1741-48,the Seven Years'War of 1756-63,and the American War for Independence of 1776-83.During these conflicts,alliances changed often,but France and England were never on the same side.The similarities in the movements of this ratio in the two countries conceal differences in policies:while Britain would modify the denominator (fiscal reve- nues),France acted on the numerator(debt service)

FRENCH REVOLUTION 477 models describe accompanying fiscal arrangements through which new issues of paper money cause little or no inflation. Legal restrictions models of the demand for currency.-These models study how a government can tax its citizens by forcing them to hold paper money it is issuing to finance a deficit; they describe circumstances in which large new issues of paper currency cause less inflation than would be expected if people were voluntarily holding the currency. Classical hyperinflation models along lines described by Cagan (1956).-These models describe circumstances in which rapidly issuing a paper currency causes prices to rise even faster than the quantity of currency. We use these theories first to shape our descriptions and second to interpret how the revolutionaries explained their actions. We document how the revolutionaries used elements of these theories in the debates that shaped the Revolution. Our double use of theories reflects the rational expectations hypothesis that parts of a time-series model are used by the people within the model to guide their forecasts and decisions. We interpret inflation during the Revolution in terms of a procession of regimes in which the "if" parts of the three types of monetary models are approximately fulfilled. II. Before the Revolution Even Absolute Monarchies Have Budget Constraints The immediate cause of the French Revolution was the fiscal crisis of 1788. For 70 years, France had confronted a sequence of similar crises, all stemming from its incomplete efforts to adopt fiscal policies that Britain had used since 1688. Figure 1 displays the ratio of debt service to fiscal revenues for France and Britain during the eighteenth century. The two series display the same pattern, increasing from very low values in 1689 to about 60 percent in 1789. The upward movements correspond to the major episodes of the "Second Hundred Years' War" between Britain and France: the Nine Years' War of 1688-97, the Spanish Succession War of 170 1-14, the Austrian Succession War of 1741-48, the Seven Years' War of 1756-63, and the American War for Independence of 1776-83. During these conflicts, alliances changed often, but France and England were never on the same side. The similarities in the movements of this ratio in the two countries conceal differences in policies: while Britain would modify the denominator (fiscal revenues), France acted on the numerator (debt service)

480 JOURNAL OF POLITICAL ECONOMY cized.In exchange for abstaining from opportunistic behavior,the government acquired credit.? Across the Channel For France,the three sharp falls in the ratio in figure 1 each corre- spond to an episode of reimbursement suspension and default in the form of cuts in interest payments.The Spanish Succession War in 1713 marks the first episode.By 1715,the debt service had been reduced through defaults on significant parts of the floating debt. The Regency (1715-23)witnessed the "system"of John Law,a vast operation that first reimbursed the debt with bank notes that deval- ued quickly.Next,the debt was reconverted into perpetuals and life annuities,with sharply reduced capital value.Finally,because these measures proved insufficient,an interest rate cut was imposed in 1726,by which time the debt service ratio stabilized at 30 percent. The second episode occurred during the Seven Years'War in 1759, when the government converted the floating debt into perpetuals and halted scheduled reimbursements of fixed-term loans.These reduc- tions continued until the Peace of Paris forced the government to resume its obligations for a short time.Lack of funds soon curtailed compliance.Meanwhile,the floating debt had again bloated to un- manageable proportions,so a third episode started in 1770.The min- istry of Terray suspended reimbursements,converted the floating debt to perpetuals,and imposed coupon reductions on bonds of be- tween 7 percent and 50 percent.Taxes were also increased in 1771-73.When Louis XVI succeeded his grandfather in 1774,the floating debt was negligible,debt service stood at less than 40 percent of revenues,and the budget was nearly balanced:375 million livres in revenues offset 415 millions in expenditures,of which 40 millions were reimbursements of outstanding debt. These recurrent French defaults reveal different patterns of gov- ernment revenues and spending between France and England.For this period,budget data for France are not as available as for Britain. To provide a counterpart to figure 2,we constructed estimates of revenues and the components of spending for the period 1759-88 (see fig.3).8 Revenues increased sharply between 1770 and 1773,and 7 In 1797,the British government was to discover another major advantage to the institution,namely the suspension of convertibility of notes,which allowed the financ- ing of the French wars.Significantly,the government did not default on the notes and resumed the gold standard at par in 1819,in effect redeeming the notes at face value and giving a handsome return to those who had accepted the notes during the Bank restriction. 8 France did not publish the government's accounts before the nineteenth century, and the financial archives burned in 1871.The remaining information is scarce,sparse

480 JOURNAL OF POLITICAL ECONOMY cized. In exchange for abstaining from opportunistic behavior, the government acquired credit.7 Across the Channel For France, the three sharp falls in the ratio in figure 1 each correspond to an episode of reimbursement suspension and default in the form of cuts in interest payments. The Spanish Succession War in 1713 marks the first episode. By 1715, the debt service had been reduced through defaults on significant parts of the floating debt. The Regency (1715-23) witnessed the "system" of John Law, a vast operation that first reimbursed the debt with bank notes that devalued quickly. Next, the debt was reconverted into perpetuals and life annuities, with sharply reduced capital value. Finally, because these measures proved insufficient, an interest rate cut was imposed in 1726, by which time the debt service ratio stabilized at 30 percent. The second episode occurred during the Seven Years' War in 1759, when the government converted the floating debt into perpetuals and halted scheduled reimbursements of fixed-term loans. These reductions continued until the Peace of Paris forced the government to resume its obligations for a short time. Lack of funds soon curtailed compliance. Meanwhile, the floating debt had again bloated to unmanageable proportions, so a third episode started in 1770. The ministry of Terray suspended reimbursements, converted the floating debt to perpetuals, and imposed coupon reductions on bonds of between 7 percent and 50 percent. Taxes were also increased in 1771-73. When Louis XVI succeeded his grandfather in 1774, the floating debt was negligible, debt service stood at less than 40 percent of revenues, and the budget was nearly balanced: 375 million livres in revenues offset 415 millions in expenditures, of which 40 millions were reimbursements of outstanding debt. These recurrent French defaults reveal different patterns of government revenues and spending between France and England. For this period, budget data for France are not as available as for Britain. To provide a counterpart to figure 2, we constructed estimates of revenues and the components of spending for the period 1759-88 (see fig. 3).8 Revenues increased sharply between 1770 and 1773, and 7 In 1797, the British government was to discover another major advantage to the institution, namely the suspension of convertibility of notes, which allowed the financing of the French wars. Significantly, the government did not default on the notes and resumed the gold standard at par in 1819, in effect redeeming the notes at face value and giving a handsome return to those who had accepted the notes during the Bank restriction. 8 France did not publish the government's accounts before the nineteenth century, and the financial archives burned in 1871. The remaining information is scarce, sparse

482 JOURNAL OF POLITICAL ECONOMY French Fiscal Backwardness or Optimality? In figure 2,Britain looks like a simulation from a Barro (1979)tax smoothing;in figure 3,France does not.It is tempting to compare France's financial arrangements unfavorably to Britain's,but theories of dynamic Ramsey taxation instruct us to be cautious about con- demning France's recurrent defaults or praising Britain's abstinence. These theories have governments offering their creditors state- contingent,after-tax returns that respond to news about the govern- ment's prospective net-of-interest fiscal surplus.Realization of a posi- tive shock to government expenditures or a negative shock to "exogenous"government revenues results in a lower payoff and good news in a higher payoff.10 We have not attempted to match these theories to our eighteenth-century observations on French and Brit- ish finance.We would have to struggle to reconcile the timing of the French defaults with these theories,in which low after-tax returns are paid on government debt at the starts of"wars."Perhaps it could be argued that the French defaults occurred in response to reckon- ings that the prospective revenues expected to accrue with French war victory had evaporated with defeat.It would require much more work to coax from these theories an understanding of why France refused to default in 1789,despite its earlier intermittent defaults. In 1789,modernizing elements in France did not regard past and prospective government defaults as part of an optimal fiscal arrange- ment.They hoped to reform fiscal institutions to rid France of those defaults,and this is one of the reasons they welcomed the king's call to the Estates General. Snapshot of the Old Regime Laws France had the appearance of an absolute monarchy.The king cre- ated law by edicts and took executive actions by Arrets du Conseil, although not all laws emanated from the king.There were also legal traditions,with forms of common law and written law varying from province to province that preexisted royal edicts.The king con- fronted the power of a dozen Parlements,with the Paris court preem- inent,which verified that new edicts were consistent with the existing 10 This is the message of Lucas and Stokey's(1983)examples 7 and 8 and Chari, Christiano,and Kehoe's(1994)fig.6. Although Britain did not default,it did issue securities callable at the government's option.Such securities expand the range of contingencies against which a government can insure and tax smooth.Equilibrium tax-smoothing models with a government constrained to issue only callable securities have not been worked out,so we do not know how closely government callable debt would approximate a setting with a com- plete set of state-contingent securities.See also Grossman and Van Huyck(1988)

482 JOURNAL OF POLITICAL ECONOMY French Fiscal Backwardness or Optimality? In figure 2, Britain looks like a simulation from a Barro (1979) tax smoothing; in figure 3, France does not. It is tempting to compare France's financial arrangements unfavorably to Britain's, but theories of dynamic Ramsey taxation instruct us to be cautious about condemning France's recurrent defaults or praising Britain's abstinence. These theories have governments offering their creditors statecontingent, after-tax returns that respond to news about the government's prospective net-of-interest fiscal surplus. Realization of a positive shock to government expenditures or a negative shock to ''exogenous" government revenues results in a lower payoff and good news in a higher payoff.10 We have not attempted to match these theories to our eighteenth-century observations on French and British finance. We would have to struggle to reconcile the timing of the French defaults with these theories, in which low after-tax returns are paid on government debt at the starts of "wars." Perhaps it could be argued that the French defaults occurred in response to reckonings that the prospective revenues expected to accrue with French war victory had evaporated with defeat. It would require much more work to coax from these theories an understanding of why France refused to default in 1789, despite its earlier intermittent defaults." In 1789, modernizing elements in France did not regard past and prospective government defaults as part of an optimal fiscal arrangement. They hoped to reform fiscal institutions to rid France of those defaults, and this is one of the reasons they welcomed the king's call to the Estates General. Snapshot of the Old Regime Laws France had the appearance of an absolute monarchy. The king created law by edicts and took executive actions by Arrnts du Conseil, although not all laws emanated from the king. There were also legal traditions, with forms of common law and written law varying from province to province that preexisted royal edicts. The king confronted the power of a dozen Parlements, with the Paris court preeminent, which verified that new edicts were consistent with the existing '0 This is the message of Lucas and Stokey's (1983) examples 7 and 8 and Chari, Christiano, and Kehoe's (1994) fig. 6. '" Although Britain did not default, it did issue securities callable at the government's option. Such securities expand the range of contingencies against which a government can insure and tax smooth. Equilibrium tax-smoothing models with a government constrained to issue only callable securities have not been worked out, so we do not know how closely government callable debt would approximate a setting with a complete set of state-contingent securities. See also Grossman and Van Huyck (1988)