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How Did Britain Democratize? Views from the Sovereign Bond Market

  • Aditya Dasgupta (a1) and Daniel Ziblatt (a2)

To assess competing theories of democratization, we analyze British sovereign bond market responses to the 1832, 1867, and 1884 Reform Acts, and to two failed Chartist agitations for reform. Analyses of high-frequency 3 percent consol yield data and historical financial press suggest three conclusions. First, democratic reform episodes were preceded by increases in perceived political risk, comparable to democratizing episodes in other countries. Second, both democratic reform and repression were followed by yield declines. Third, the source of political risk in Britain was both social unrest and political deadlock. Together, the findings challenge the “Whig” characterization of British democratization as exceptionally risk-free.

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We thank James Alt, David Art, Ann Carlos, Jeff Frieden, Noam Gidron, Alexander Kuo, James Robinson, Jean-Laurent Rosenthal, three anonymous reviewers, and seminar participants at Harvard, the Juan March Institute, UCLA, and Yale for comments, and Robert Brown and Stephen Easton for sharing data. All errors are our own.

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