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The Political Economy of Global Financial Liberalisation in Historical Perspective

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  • Rui Esteves

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 empricial foundation and some suggestions for further research are also proposed.

Suggested Citation

  • Rui Esteves, 2011. "The Political Economy of Global Financial Liberalisation in Historical Perspective," Oxford Economic and Social History Working Papers _089, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:esohwp:_089
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    2. Rui Esteves & João Tovar Jalles, 2016. "Like Father Like Sons? The Cost of Sovereign Defaults in Reduced Credit to the Private Sector," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(7), pages 1515-1545, October.
    3. 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.
    4. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Oxford Economic and Social History Working Papers _104, University of Oxford, Department of Economics.
    5. 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.

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    More about this item

    Keywords

    Political economy; financial liberalisation; capital controls; pre-war;
    All these keywords.

    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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