MACRO: Costs of Financing US Federal Debt Under a Gold Standard: 1791-1933; Dr Jonathan Payne (Princeton University)

Abstract

From a new data set, we infer time series of term structures of yields on US federal bonds during the gold standard era from 1791-1933. Gold denominated yields trended downwards throughout the 19th century, falling below UK levels by the 1880s. Bonds nearing maturity carried a “liquidity premium” except during the height of the National Banking Era from 1880-1913. Despite the Union’s issues of inconvertible greenbacks, long term price expectations were anchored during 1862-1879.

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