EH.Net Abstracts in Economic History

                EHS Abstract Submission
                    (c) 1996 EH.Net
-----------------------------------------------------------
              Name:  Carlos A. Vegh
               Email:  cvegh at ucla.edu
         Institution:  University of California-Los Angeles  

         Co-author:  Michael Bordo
                            Department of Economics
                            Rutgers University

 
             Title:  If Only Alexander Hamilton Had Been Argentinean:  A
Comparison of the Early Monetary Experiences of Argentina and the United
States

  Internet Address
of abstracted work:   Not available on the Internet  

           By mail:  
                     Department of Economics
                     UCLA
                     Box 951477
                     Los Angeles, CA 90095-1477 USA  

          Language:  English
 
          Abstract:
   The contrast between the early-nineteenth-century Argentinean
experience of high inflation and the American experience of low
inflation is interpreted in terms of a dynamic monetary model of
optimal taxation.  It is argued that the two countries'
experiences diverged because of the different constraints they
faced in financing wartime government expenditures.  In the
presence of frequent wars, ever-tightening access to foreign
capital, and an inadequate tax base, Argentina's use of the
inflation tax may be viewed as an optimal solution to its wartime
problems.  By contrast, with the exception of the Revolutionary
War, the absence of such constraints in the United States
required full-tax smoothing, with only a temporary use of the
inflation tax during wartime.  Such policies were embodied in
Alexander Hamilton's fiscal package of 1790, which allowed the
United States to bond-finance most subsequent wartime expenditures.

 
      Bibliography:  Bordo, Michael and Carlos Vegh.  "If Only
Alexander 
                        Hamilton Had Been Argentinean:  A
Comparison of the 
                        Early Monetary Experiences of Argentina
and the United 
                        States." Paper prepared for ASSA
Meeting/Cliometric 
                        Society Sessions, New Orleans, January
1997. 

 
                  Subject:  H
 Geographical Area:  0
      Country/Region:  Argentina/United States
           Time Period:  6, 7