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Sovereign debt in Latin America, 1820-1913*

  • Gerardo della Paolera (a1) and Alan M. Taylor (a2)

This paper examines sovereign lending to Latin America and the Caribbean from 1820 to 1913. We examine four waves of capital flows where defaults were followed by a return to market access. In spite of extended default, countries kept promising high returns that attracted international investors again and again: financial autarky thus gave way to eras of high integration to global markets as measured by sovereign risk pricing. We discuss imperfections of the sovereign debt institutional context in the region and discuss a menu of options that some countries used to seek funds in the global financial markets after defaults. The parallel with the modern Latin American and Caribbean sovereign bond market experience is striking.

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The authors thank the IDB for support and Leticia Arroyo Abad for excellent research assistance. Gerardo della Paolera acknowledges financial and research support during his stay at Universidad Carlos III at the Cátedra de Excelencia Banco Santander, Spring Semester 2012. The authors received valuable feedback from the editors and three anonymous referees. All errors are ours.

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Revista de Historia Economica - Journal of Iberian and Latin American Economic History
  • ISSN: 0212-6109
  • EISSN: 2041-3335
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