An exorbitant privilege in the first age of international financial integration?

Carlos Eduardo van Hombeeck

Journal of International Money and Finance, 2020, vol. 101, issue C

Abstract: Whether the United Kingdom enjoyed an exorbitant privilege over the period 1871–1914 is analysed with a new dataset. The use of microdata on financial securities sheds light on some issues arising from US studies. A monthly proxy for the British international investment position and estimates of returns are constructed, pointing to an average benefit of 8.3% of GDP, with high variation. The finding supports the claim that exorbitant privilege is partly a general characteristic of the issuer of the global reserve currency. Nonetheless, there are fundamental differences between the two countries: Britain “grossed up” small returns by a large positive position.

Keywords: Exorbitant privilege; International investment position; Global reserve currencies (search for similar items in EconPapers)
JEL-codes: F21 F36 N23 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Working Paper: An exorbitant privilege in the first age of international financial integration (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:101:y:2020:i:c:s0261560619302153

DOI: 10.1016/j.jimonfin.2019.102092

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