Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
967325 | Journal of Monetary Economics | 2007 | 24 Pages |
Abstract
We study the classic transfer problem using the largest historical example, the Franco-Prussian War indemnity of 1871-1873 which saw France transfer to Germany 25% of a year's GDP. A dynamic, two-country model allows for debt finance, supply-side effects, and controls for wartime spending. The model can fit the historical paths of French net exports and the terms of trade. But explaining French output and consumption requires additional shocks. These results illustrate the usefulness of the DSGE approach to the transfer problem and provide striking evidence of the importance of international capital markets in the 19th century.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Michael B. Devereux, Gregor W. Smith,