George Hall and Thomas Sargent
Brandeis University and Hoover Institution
ghall@brandeis.edu, ts43@nyu.edu |
(and Julia and Python and Pandas)
Collect data on promised pay outs, prices, and quantities of US government notes and bonds and on federal government expenditures and tax collections from 1775 to 2024
Interpret them in light of
Government budget constraints
Arrow-Hicks asset pricing theory
Barro and Lucas-Stokey tax smoothing models
US Federal Debt 1776 - 1960: Quantities and Prices, github 2018
(with George Hall and Jonathan Payne and Balint Szoke)
http://www.tomsargent.com/research/ReadMe_Pub.pdf
Pay out streams, prices, and quantities of every bond US Congress issued 1775-1940
Organize with Python and Pandas
Share on github
Interest Rate Risk and Other Determinants of Post-WWII US Government Debt/GDP Dynamics , AEJ Macro, 2011; (with George Hall)
https://www.aeaweb.org/articles?id=10.1257/mac.3.3.192
Therefore, we use government budget constraint and Arrow-Hicks price formulas to construct
values of government debts
returns on government debts
Exercise 28.1 of Recursive Macroeconomic Theory, fifth edition
Martin Ellison and Andrew Scott for historical UK data
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3039029
Piyali Das and Chetan Ghate for India
United States Then, Europe Now, JPE 2012
https://mfidev.uchicago.edu/files/Sargent_Sweden_11.pdf
Evidence and interpretations coincide with Jonathan A. Rodden's
Murray Rothbard's perspective
United States Then, Europe Now, JPE 2012
https://mfidev.uchicago.edu/files/Sargent_Sweden_11.pdf
Who controls power of the purse?
War finance
Strings attached?
Haircuts
United States Then, Europe Now, JPE 2012
https://mfidev.uchicago.edu/files/Sargent_Sweden_11.pdf
Fiscal Discriminations in Three Wars, JME, 2014
(with George Hall)
https://www.sciencedirect.com/science/article/pii/S0304393213001220
Inflationary finance and post-war returns
James Madison and War of 1812
Civil War – Ulysses S. Grant versus Andrew Johnson
Complications for the United States from International Credits: 1913-1940, IMF, 2019 (with George Hall)
Before 1914, the US was a net debtor to foreigners.
In 1887 Henry Carter Adams forecast that US economic growth and falling returns on US securities would eventually transform the US into a net foreign creditor.
Adams said that would unleash political forces for the US to abandon its isolationist foreign policy
Complications paper is about how Adams' forecast came true
Debt and Entanglements –IMF volume
Irving Fisher and price level targetting
Franklin Roosevelt's bombshell message to London Economic conference
Roosevelt as Chicago economist
permanent versus temporary
price stability
I would regard it as a catastrophe amounting to a world tragedy if the great Conference of Nations, called to bring about a more real and permanent financial stability and a greater prosperity to the masses of all Nations, should, in advance of any serious effort to consider these broader problems, allow itself to be diverted by the proposal of a purely artificial and temporary experiment affecting the monetary exchange of a few Nations only.
I do not relish the thought that insistence on such action should be made an excuse for the continuance of the basic economic errors that underlie so much of the present world-wide depression.
The world will not long be lulled by the specious fallacy of achieving a temporary and probably an artificial stability in foreign exchange on the part of a few large countries only.
The sound internal economic system of a Nation is a greater factor in its well-being than the price of its currency in changing terms of the currencies of other Nations.
It is for this reason that reduced cost of Government, adequate Government income, and ability to service Government debts are all so important to ultimate stability.
Let me be frank in saying that the United States seeks the kind of dollar which a generation hence will have the same purchasing and debt-paying power as the dollar value we hope to attain in the near future.
That objective means more to the good of other Nations than a fixed ratio for a month or two in terms of the pound or franc.
Brief history of US debt limits before 1939, Proceedings National Academy of Sciences, 2018
https://www.pnas.org/content/115/12/2942.short
No debt limit
Instead Congress designed each bond 1775-1921,
Congress delegated design authority to treasury gradually, 1921-1939
We construct pre-1939 debts limit by adding up bond-by-bond limits
Debt and Taxes in Eight U.S. Wars and Two Insurrections, Handbook of Historical Economics, 2021 (with George Hall)
http://www.tomsargent.com/research/war_compare.pdf
Fractions of expenditure surges financed by debt and taxes
Self-insurance? Barro tax smoothing via precautionary saving
Insurance? Lucas-Stokey tax smoothing
https://python-advanced.quantecon.org/smoothing_tax.html
Costs of Financing US Federal Debt Under a Gold Standard: 1791-1933, January 2024
(with Jonathan Payne and Balint Szoke and George Hall)
Historical yield curves for US government debt
yields on zero coupon bonds
Estimate Nelson-Siegel (1987)
-period gold dollar zero-coupon yield curves
Random walk, stochastic volatility models for
level, slope, curvature
With George Hall
http://www.tomsargent.com/research/Three_Wars.pdf
WWI, WWII, War on COVID-19
Common patterns