Interest Reductions in the Politico-Financial Nexus of 18th Century England

Christophe Chamley ()
Additional contact information
Christophe Chamley: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, BU - Boston University [Boston]

Post-Print from HAL

Abstract: In the 1730s and 1750s the English government proposed to refinance the redeemable debt by "lowering the interest rate." In the ensuing coordination game among creditors, large investors like the Bank of England could block the policy change by demanding cash. Using 4 percent and 3 percent annuities prices to analyze market expectations, this article studies two refinancing episodes with very different fates. Lord Barnard failed in 1737 because his terms were too strict and financial agents induced a temporary market crash. Lord Pelham succeeded in 1750 because his better terms fit market prices, and interest rates had fallen much faster than expected.

Date: 2011-09
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published in Journal of Economic History, 2011, 71 (3), pp.555-589. ⟨10.1017/S0022050711001847⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754521

DOI: 10.1017/S0022050711001847

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().