This article explores the determinants of price level fluctuations in Britain during the first suspension of the gold standard over the 1797-1821 period. I find that the contemporary price level was determined by world gold prices and expectations regarding the resumption of the gold standard at the pre-war parity. As the latter hinged on market participants’ expectations concerning the financial burden of the Napoleonic Wars, my contribution establishes the importance of fiscal factors for the determination of the price level.
Classification JEL : N13, N23, N43, C22.
Keywords : Fiscal Theory of the Price Level, debt monetization, structural breaks.
Updated on: 06/12/2018 11:10