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Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 Author info | Abstract | Publisher info | Download info | Related research | Statistics Maurice Obstfeld (University of California, Berkeley and CEPR and NBER)
Alan Taylor (University of California at Davis, and NBER)
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What determines sovereign risk? We study the London bond market from the 1870s to the 1930s. Our findings support conventional wisdom concerning the low credibility of the interwar gold standard. Before 1914 gold standard adherence effectively signalled credibility and shaved up to 30 basis points from country borrowing spreads. In the 1920s, however, simply resuming prewar gold parities was insufficient to secure benefits. Countries that devalued before resumption were treated more favorably, and markets scrutinized other signals. Public debt and British Empire membership were important determinants of spreads after World War One, but not before.
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Paper provided by Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley in its series Center for International and Development Economics Research, Working Paper Series with number
1029.
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Date of creation: 27 Jun 2006Date of revision:
Handle: RePEc:cdl:ciders:1029Note: oai:cdlib1:Contact details of provider: Postal: F502 Haas, Berkeley CA 94720-1922 Phone: (510) 642-1922 Fax: (510) 642-5018 Email: Web page: http://repositories.cdlib.org/iber/cider/ More information through EDIRC
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Keywords: Gold standard sovereign risk credibility monetary regimes exchange rates Other versions of this item:
Article Paper Obstfeld, Maurice & Taylor, Alan M, 2003.
"Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 ,"
CEPR Discussion Papers
3688, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Maurice Obstfeld & Alan M. Taylor & ), 2003.
"Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 ,"
International Trade
0303001, EconWPA.
[Downloadable!] Maurice Obstfeld & Alan M. Taylor, 2002.
"Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 ,"
NBER Working Papers
9345, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) This paper has been announced in the following NEP Reports :
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7186, National Bureau of Economic Research, Inc.
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199407, Rutgers University, Department of Economics.
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Niall Ferguson & Moritz Schularick, 2005.
"The Empire Effect: Country Risk in the First Age of Globalization, 1880-1913 ,"
Economic History
0509002, EconWPA.
[Downloadable!]
Prasanna Gai & Kang-yong Tan, 2004.
"Good Housekeeping? Reputation, Fixed Exchange Rates, and the 'Original Sin' Problem ,"
Working Papers
082004, Hong Kong Institute for Monetary Research.
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Michael D. Bordo & Christopher M. Meissner, 2005.
"The Role of Foreign Currency Debt in Financial Crises: 1880-1913 vs. 1972-1997 ,"
NBER Working Papers
11897, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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