SOVEREIGN RISK IN THE CLASSICAL GOLD STANDARD ERA

Gavin Cameron, Prasanna Gai and Kang Yong Tan ()

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper explores the determinants of sovereign bond yields during the classical gold standard period (1872-1913). Using the Pooled Mean Group methodology, we find that the main benefit of the gold standard was as a short-hand device that enhanced a country’s reputation in international capital markets. By conveying important information to investors and enhancing the speed of adjustment of sovereign bond spreads to long-run equilibrium levels, the gold standard allowed country risk to be priced more effectively. In contrast to other studies, our results suggest that fundamental factors were more important in determining a country’s creditworthiness in the long-run than the exchange rate regime per se.

JEL-codes: F33 F34 F41 N10 N20 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2006-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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https://cama.crawford.anu.edu.au/sites/default/fil ... ron_gai_tan_2006.pdf (application/pdf)

Related works:
Journal Article: Sovereign Risk in the Classical Gold Standard Era (2009)
Working Paper: Sovereign Risk in the Classical Gold Standard Era (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2006-11

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