Study finds that politics, public expectations fuel hyperinflation.
More than 200 years later, historians are still gleaning some unexpected insights from the French Revolution -- not about tyranny or liberty -- but rather, inflation.
Rouanet is the lead author of the new study,"Assignats or death: The politics and dynamics of hyperinflation in revolutionary France," published recently in the. A faculty member of the UTEP Department of Economics and Finance, Rouanet is an expert in economic history, specializing in revolutionary France, and a Frenchman himself. The study advances a new framework for understanding the monetary phenomenon hyperinflation, a period of rapid and extreme price increases.
The French Revolution began at the end of the 18th century when extreme popular discontent with feudal institutions erupted into revolution, Rouanet said. The conflict reshaped the French government and led to the end of the feudal system, a hierarchical system of government that placed the king at the top, nobility and clergy below him, and peasants below all.
At the same time, the strength of the Jacobin party was weakening. From failing insurrections in Paris and the establishment of a new regime known as the Directory, the key drivers of theThe political instability, coupled with public mistrust, prompted a rush to spend the, which led to hyper-inflation, according to Rouanet. The research concludes that changing expectations and the public's anticipation of inflation can work together to create actual inflation.
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