The McKenna rule and U.K. World War I finance
By: James M. Nason and Shaun P. Vahey.
Contributors: Vahey, Shaun P.; Federal Reserve Bank of Atlanta.
Series: Working paper series / Federal Reserve Bank of Atlanta -- 2007-3; Working paper series (Federal Reserve Bank of Atlanta : Online) -- 2007-3.
Publisher: Federal Reserve Bank of Atlanta
Published: 2007
Place of publication: [Atlanta, Ga.]
Language: eng
Format: Electronic resource
Description: "The United Kingdom employed the McKenna rule to conduct fiscal policy during World War I (WWI) and the interwar period.  Named for Reginald McKenna, Chancellor of the Exchequer (1915-16), the McKenna rule committed the United Kingdom to a path of debt retirement, which we show was forward-looking and smoothed in response to shocks to the real economy and tax rates.  The McKenna rule was in the tradition of the “English method” of war finance because the United Kingdom taxed capital to finance WWI.  Higher rates of capital taxation also paid for debt retirement during and subsequent to WWI.  The United Kingdom was motivated to implement the McKenna rule because of a desire to achieve a balance between fairness and equity.  However, the McKenna rule adversely affected the real economy, according to a permanent income model.  WWI and interwar U.K.  data support the prediction that real activity is lower in response to higher past debt retirement rates"--Federal Reserve Bank of Atlanta web site.
Notes: Title from PDF file as viewed on 5/14/2007.

Includes bibliographical references.

Also available in print.

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Mode of access: World Wide Web.