The primary objective of the proposed research is to document the real returns to government debt from 1790 to the present. To accomplish this the investigator will extend an existing dataset on the market prices and the outstanding quantities of every U.S. Treasury bill, note and bond back to the birth of the republic. The data will be collected by hand from individual newspapers and U.S. Treasury documents. Such a dataset will allow the investigator to: (i) study the time path of risk sharing of fiscal shocks across taxpayers and bondholders; (ii) better connect modern neo-classical theories of optimal monetary and fiscal policy to data; and (iii) construct a time-series of the real borrowing costs to the Federal government.
The proposed research will have three broad impacts. First, it will aid our understanding of how the U.S. government has historically managed its debt. Second, it will generate a database on every security issued by the U.S. Treasury; this will be useful to the research community in finance, public finance, and macroeconomics. Third, it will produce an alternative measure to one produced by the U.S. Treasury of the real cost of the federal debt. The results of this project will be disseminated through working papers and participation in scientific conferences.
