That's Where the Money Was: Foreign Bias and English Investment Abroad, 1866-1907

Benjamin Chabot and Christopher J. Kurz
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Christopher J. Kurz: Federal Reserve Board

Working Papers from Yale University, Department of Economics

Abstract: Why did Victorian Britain invest so much capital abroad? We collected over 500,000 monthly returns of British and foreign securities trading in London and the United States between 1866 and 1907. These heretofore-unknown data allow us to better quantify the historical benefits of international diversification and revisit the question of whether British Victorian investor bias starved new domestic industries of capital. We find no evidence of bias. A British investor who increased his investment in new British industry at the expense of foreign diversification would have been worse off. The addition of foreign assets significantly expanded the mean-variance frontier and resulted in utility gains equivalent to a meaningful increase in lifetime consumption.

JEL-codes: E44 F22 G11 G15 N21 N23 O16 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-his and nep-mac
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Working Paper: That's Where the Money Was: Foreign Bias and English Investment Abroad, 1866-1907 (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:yaleco:64

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