Sovereign Risk in the Classical Gold Standard Era
Gavin Cameron and
Kang Yong Tan ()
No 258, Economics Series Working Papers from University of Oxford, Department of Economics
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 can be seen 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 indicate that fundamental factors appear to be more important in determining a country`s creditworthiness in the long-run than the exchange rate regime per se.
Keywords: Gold Standard; Sovereign Risk; Heterogeneous Dynamic Panels; Pooled Mean Group Estimator (search for similar items in EconPapers)
JEL-codes: F33 F34 F41 N10 N20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-his and nep-ifn
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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:oxf:wpaper:258
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