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The Political Economy of Global Financial Liberalisation in Historical Perspective

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  • Rui P. Esteves

    () (Department of Economics and Brasenose College, University of Oxford,)

Abstract

This paper is a first attempt to garner the theory and evidence on the political economy of the first wave of financial liberalisation during the nineteenth and early twentieth century, and of its demise after World War I. Not everyone gained from the process of globalisation (of trade, labour, and finance), which brought about important changes in the structure of the economy and the distribution of income in nations across the world. This paper explores how the economic incentives generated by these dislocations translated, through the political system, into choices about openness to foreign capital and financial integration. The period before World War I is remarkable by the almost absence of restrictions on cross-border capital flows, which may explain the little attention it has received in the historical literature, compared to the extensive study of trade protectionism in this period. After the War, many countries experimented with capital controls which varied in nature and intensity and were intensified during the Depression. Despite the attempt made here to reconcile these stylized facts to models of political economy, the analysis requires a better empirical foundation and some suggestions for further research are also proposed.

Suggested Citation

  • Rui P. Esteves, 2011. "The Political Economy of Global Financial Liberalisation in Historical Perspective," Oxford University Economic and Social History Series _089, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:esohwp:_089
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    File URL: http://www.economics.ox.ac.uk/materials/papers/5094/esteves89.pdf
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    References listed on IDEAS

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    1. Sebnem Kalemli-Ozcan & Alex Nikolsko-Rzhevskyy, 2010. "Does Trade Cause Capital to Flow? Evidence from Historical Rainfalls," NBER Working Papers 16034, National Bureau of Economic Research, Inc.
    2. Kevin H. O'Rourke & Alan M. Taylor, 2006. "Democracy and Protectionism," NBER Working Papers 12250, National Bureau of Economic Research, Inc.
    3. Romain Rancière & Aaron Tornell & Frank Westermann, 2008. "Systemic Crises and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 359-406.
    4. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, January.
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    Cited by:

    1. Eric B. Schneider, 2014. "Prices and production: agricultural supply response in fourteenth-century England," Economic History Review, Economic History Society, vol. 67(1), pages 66-91, February.
    2. Schneider, Eric B., 2013. "Real wages and the family: Adjusting real wages to changing demography in pre-modern England," Explorations in Economic History, Elsevier, vol. 50(1), pages 99-115.
    3. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Economics Series Working Papers Number 104, University of Oxford, Department of Economics.
    4. Mehmet Okan Ta?ar & Sava? Çevik, 2014. "Financial Liberalization in the Developing Countries and Its Effect on Banking Systems and Banking Crises," Proceedings of International Academic Conferences 0702096, International Institute of Social and Economic Sciences.

    More about this item

    Keywords

    political economy; financial liberalisation; capital controls; pre-war;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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