Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31

Maurice Obstfeld, Alan Taylor and )

International Trade from University Library of Munich, Germany

Abstract: What determines sovereign risk? We study the London bond market from the 1870s to the 1930s. Our findings support conventional wisdom concerning the low credibility of the interwar gold standard. Before 1914 gold standard adherence effectively signalled credibility and shaved up to 30 basis points from country borrowing spreads. In the 1920s, however, simply resuming prewar gold parities was insufficient to secure benefits. Countries that devalued before resumption were treated more favorably, and markets scrutinized other signals. Public debt and British Empire membership were important determinants of spreads after World War One, but not before.

JEL-codes: F2 F33 F36 F41 N10 N20 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2003-03-25
New Economics Papers: this item is included in nep-rmg
Note: 46 pages, Acrobat .pdf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (73)

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Related works:
Journal Article: Sovereign risk, credibility and the gold standard: 1870-1913 versus 1925-31 (2003)
Working Paper: Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 (2003)
Working Paper: Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 (2003)
Working Paper: Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 (2003)
Working Paper: Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31 (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpit:0303001

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