Inflation and Regulation of Government Debt: US Historical Evidence

Jonathan Payne; Bálint Szőke

doi:10.1146/annurev-financial-112823-015810

Inflation and Regulation of Government Debt: US Historical Evidence

Jonathan Payne
, Bálint Szőke

Research output: Contribution to journal › Review article › peer-review

Abstract

Governments have often used two policy instruments to lower financing costs: the money supply to generate seigniorage and regulation of the financial system to increase demand for their interest-bearing bonds. Both involve trade-offs. This article marshals historical evidence and economic theories about how the US federal government has arranged monetary, financial, and fiscal systems since 1800 to lower its financing costs. In doing so, we infer evolving priorities of different US administrations.

Original language	English (US)
Pages (from-to)	151-172
Number of pages	22
Journal	Annual Review of Financial Economics
Volume	17
Issue number	1
DOIs	https://doi.org/10.1146/annurev-financial-112823-015810
State	Published - Jun 12 2025

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

Keywords

convenience yields
financial regulation
gold standard
government debt capacity
seigniorage

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10.1146/annurev-financial-112823-015810

Cite this

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N2 - Governments have often used two policy instruments to lower financing costs: the money supply to generate seigniorage and regulation of the financial system to increase demand for their interest-bearing bonds. Both involve trade-offs. This article marshals historical evidence and economic theories about how the US federal government has arranged monetary, financial, and fiscal systems since 1800 to lower its financing costs. In doing so, we infer evolving priorities of different US administrations.

AB - Governments have often used two policy instruments to lower financing costs: the money supply to generate seigniorage and regulation of the financial system to increase demand for their interest-bearing bonds. Both involve trade-offs. This article marshals historical evidence and economic theories about how the US federal government has arranged monetary, financial, and fiscal systems since 1800 to lower its financing costs. In doing so, we infer evolving priorities of different US administrations.

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Inflation and Regulation of Government Debt: US Historical Evidence

Abstract

All Science Journal Classification (ASJC) codes

Keywords

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