IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Military conquest and sovereign debt: Chile, Peru and the London bond market, 1876–1890

  • Richard Sicotte


    (University of Vermont, Burlington, VT, USA)

  • Catalina Vizcarra

    (University of Vermont, Burlington, VT, USA)

  • Kirsten Wandschneider

    (Occidental College, Los Angeles, CA, USA)

As a result of the War of the Pacific (1879–1883), Chile conquered Peruvian and Bolivian territories rich in nitrates and guano. We conduct econometric tests for structural breaks in the time series of the government bonds for Chile and Peru between 1876 and 1890 in order to examine the effects of the changes in resource endowments on the investors’ perceptions of the risk premia of Chilean and Peruvian securities. Our results reveal that investors were extremely pessimistic about the prospects of Chilean, and especially Peruvian debt prior to the war. Early Chilean victories that anticipated the transfer of the richly endowed provinces to Chile caused significant increases in the price of Chilean securities. But such was the low regard with which investors viewed the Peruvian government that the fall of Lima caused an increase in the price of Peruvian bonds on the hope that Chile would assume some of the responsibility for them. Endowments, reputations, and the countries’ financial conditions figure prominently as the driving forces behind the investors’ behavior.

If 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.

File URL:
Download Restriction: Access to full text is restricted to journal subscribers

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Association Française de Cliométrie (AFC) in its journal Cliometrica, Journal of Historical Economics and Econometric History.

Volume (Year): 4 (2010)
Issue (Month): 3 (October)
Pages: 293-319

in new window

Handle: RePEc:afc:cliome:v:4:y:2010:i:3:p:293-319
Contact details of provider: Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:afc:cliome:v:4:y:2010:i:3:p:293-319. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.