How Japan remained on the Gold Standard despite unsustainable external debt

Giovanni B. Pittaluga and Elena Seghezza ()

Explorations in Economic History, 2016, vol. 59, issue C, 40-54

Abstract: In the period of the classic gold standard, most peripheral countries were frequently affected by so-called sudden stops as well as by financial and currency crises. Yet pre-War Japan was an outlier. Though its level of external debt was not sustainable, Japan issued many government foreign loans to cover its current account deficits, was never affected by currency crises, and was never forced to suspend convertibility. We argue that, from the late nineteenth century until just before World War I, Japan and Britain engaged in a politico-economic exchange: Japan offered to protect Britain's economic and political interests in the Far East provided that Britain gave the rising Asian power access to financial markets—namely, in the City of London.

Keywords: Gold standard; Japanese debt; Pre-WWI economies; Anglo-Japanese alliance; Financial crises (search for similar items in EconPapers)
JEL-codes: E42 F34 N15 N25 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:59:y:2016:i:c:p:40-54

DOI: 10.1016/j.eeh.2015.09.004

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