Abstract
Under the Articles of Confederation, the central government of the United States had limited power to tax. Therefore, large debts accumulated during the US War for Independence traded at deep discounts. That situation framed a US fiscal crisis in the 1780s. A political revolution-for that was what scuttling the Articles of Confederation in favor of the Constitution of the United States of America was- solved the fiscal crisis by transferring authority to levy tariffs from the states to the federal government. The Constitution and acts of the First Congress of the United States in August 1790 gave Congress authority to raise enough revenues to service a big government debt. In 1790, the Congress carried out a comprehensive bailout of state governments' debts, part of a grand bargain that made creditors of the states become advocates of ample federal taxes. That bailout created expectations about future federal bailouts that a costly episode in the early 1840s proved to be unwarranted.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1-40 |
| Number of pages | 40 |
| Journal | Journal of Political Economy |
| Volume | 120 |
| Issue number | 1 |
| DOIs | |
| State | Published - Feb 2012 |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Nobel lecture : United States then, Europe now. / Sargent, Thomas.
In: Journal of Political Economy, Vol. 120, No. 1, 02.2012, p. 1-40.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Nobel lecture
T2 - United States then, Europe now
AU - Sargent, Thomas
PY - 2012/2
Y1 - 2012/2
N2 - Under the Articles of Confederation, the central government of the United States had limited power to tax. Therefore, large debts accumulated during the US War for Independence traded at deep discounts. That situation framed a US fiscal crisis in the 1780s. A political revolution-for that was what scuttling the Articles of Confederation in favor of the Constitution of the United States of America was- solved the fiscal crisis by transferring authority to levy tariffs from the states to the federal government. The Constitution and acts of the First Congress of the United States in August 1790 gave Congress authority to raise enough revenues to service a big government debt. In 1790, the Congress carried out a comprehensive bailout of state governments' debts, part of a grand bargain that made creditors of the states become advocates of ample federal taxes. That bailout created expectations about future federal bailouts that a costly episode in the early 1840s proved to be unwarranted.
AB - Under the Articles of Confederation, the central government of the United States had limited power to tax. Therefore, large debts accumulated during the US War for Independence traded at deep discounts. That situation framed a US fiscal crisis in the 1780s. A political revolution-for that was what scuttling the Articles of Confederation in favor of the Constitution of the United States of America was- solved the fiscal crisis by transferring authority to levy tariffs from the states to the federal government. The Constitution and acts of the First Congress of the United States in August 1790 gave Congress authority to raise enough revenues to service a big government debt. In 1790, the Congress carried out a comprehensive bailout of state governments' debts, part of a grand bargain that made creditors of the states become advocates of ample federal taxes. That bailout created expectations about future federal bailouts that a costly episode in the early 1840s proved to be unwarranted.
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U2 - 10.1086/665415
DO - 10.1086/665415
M3 - Article
VL - 120
SP - 1
EP - 40
JO - Journal of Political Economy
JF - Journal of Political Economy
SN - 0022-3808
IS - 1
ER -