Empire, Public Goods, and the Roosevelt Corollary
AbstractThe Roosevelt Corollary to the Monroe Doctrine marked a turning point in American foreign policy. In 1904, President Roosevelt announced that, not only were European powers not welcome in the Americas, but that the U.S. had the right to intervene in the affairs of Central American and Caribbean countries that were unstable and did not pay their debts. We use this change in U.S. policy to test Kindleberger's hypothesis that a hegemon can provide public goods such as increased financial stability and peace. Using a newly assembled database of weekly sovereign debt prices, we find that the average sovereign debt price for countries under the U.S. 'sphere of influence' rose by 74% in the year following the announcement of the policy. With the dramatic rise in bond prices, the threat of European intervention to support bondholder claims in the Western Hemisphere waned, and the U.S. was able to exert its role as regional hegemon. We find some evidence that the Corollary spurred export growth and better fiscal management by reducing conflict in the region, but it appears that debt settlements were driven primarily by gunboat diplomacy and the threat of lost sovereignty.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10729.
Date of creation: Sep 2004
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
This paper has been announced in the following NEP Reports:
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.:
- David H. Cutler & James M. Poterba & Lawrence H. Summers, 1988.
"What Moves Stock Prices?,"
487, Massachusetts Institute of Technology (MIT), Department of Economics.
- Alan M. Taylor, 2003. "Foreign Capital in Latin America in the Nineteenth and Twentieth Centuries," NBER Working Papers 9580, National Bureau of Economic Research, Inc.
- Schularick, Moritz & Steger, Thomas M., 2008. "The Lucas Paradox and the quality of institutions: then and now," Discussion Papers 2008/3, Free University Berlin, School of Business & Economics.
- Rui Pedro Esteves, 2007. "Quis custodiet quem? Sovereign Debt and Bondholders` Protection Before 1914," Economics Series Working Papers 323, University of Oxford, Department of Economics.
- Gerardo della Paolera & Alan M. Taylor, 2012.
"Sovereign Debt in Latin America, 1820–1913,"
CEU Working Papers
2012_18, Department of Economics, Central European University, revised 19 Sep 2012.
- Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013.
"Waterloo: a Godsend for French Public Finances?,"
Working Papers CEB
13-028, ULB -- Universite Libre de Bruxelles.
- Christopher J. Coyne & Steve Davies, 2007. "Empire: Public Goods and Bads," Econ Journal Watch, Econ Journal Watch, vol. 4(1), pages 3-45, January.
- Kris James Mitchener & Marc D. Weidenmier, 2005. "Supersanctions and Sovereign Debt Repayment," NBER Working Papers 11472, National Bureau of Economic Research, Inc.
- NAKABAYASHI, Masaki, 2008. "Imposed Efficiency of Treaty Port: Japanese Industrialization and Western Imperialist Institutions," ISS Discussion Paper Series (series F) f142, Institute of Social Science, The University of Tokyo, revised 07 Dec 2013.
- Niall Ferguson & Moritz Schularick, 2005. "The Empire Effect: Country Risk in the First Age of Globalization, 1880-1913," Economic History 0509002, EconWPA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.