Mardi | 2013-01-22
Kim OOSTERLINCK – L. URECHE-RANGAU – Jacques-Marie VASLIN – libre
Following Waterloo managing French public finances represented a daunting task. Defeated France had lost a substantial part of its population and of its territory. Part of the country was occupied and France was to pay huge amounts as reparations to the victors. Furthermore France’s reputation had been tarnished by the partial default on its debts in 1797. Despite all these elements, in the ten years between 1815 and 1825 not only did France manage to place a huge amount of debt on the market (resulting in a threefold increase) but it did so with a spread, compared to the British consol, falling from more than 400 basis points to a meagre 100 basis point. Based on an econometric analysis of the yields of the French rentes, we show that the improvement in French institutions explains the dramatic decrease in yields.