Skip to main content
×
Home
    • Aa
    • Aa

Sovereign debt in Latin America, 1820-1913*

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

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.

RESUMEN

En este artículo se analizan algunos aspectos de la deuda soberana de América latina y el Caribe durante el período 1820-1913. Se examinan las cuatro oleadas del auge crediticio y del movimiento de capitales que terminaron en episodios de defaults generalizados pero que no obstaculizaron a priori sucesivos retornos al mercado de capitales en la mayoría de los casos estudiados. A pesar de defaults que se extendieron en el tiempo, los países de la región atrajeron en cada oleada a una mayor cantidad de inversores internacionales. A períodos de aislamiento del mercado de deuda soberana se le suceden otros de una alta integración con el mercado global medido por el «premio» a pagar por el riesgo soberano o riesgo país. Se discuten las imperfecciones en el mercado de la deuda soberana; los aspectos macro y microeconómicos y se discuten un menú de opciones que algunos de estos países utilizaron para reestablecer el canal de fondeo internacional luego de los defaults. El paralelismo con los vaivenes en el mercado de deuda soberana contemporánea en América latina y el Caribe resulta sorprendente.

Copyright
Footnotes
Hide All

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.

Footnotes
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

M. de Paiva Abreu (2006): «Brazil as a Debtor, 1824-1931». Economic History Review, 59 (4), pp. 765-787.

O. Accominotti ; M. Flandreau R. Rezzik (2011): «The Spread of Empire: Clio and the Measurement of Colonial Borrowing Costs». Economic History Review, 64 (2), pp. 385-407.

D. Acemoglu ; S. Johnson J. A. Robinson (2001): «The Colonial Origins of Comparative Development: An Empirical Investigation». American Economic Review, 91 (5), pp. 1369-1401.

R. J. Barro (1989): «The Ricardian Approach to Budget Deficits». Journal of Economic Perspectives, 3 (2), pp. 37-54.

M. D. Bordo F. E. Kydland (1995): «The Gold Standard As a Rule: An Essay in Exploration». Explorations in Economic History, 32 (4), pp. 423-464.

M. D. Bordo C. A. Végh (2002): «What if Alexander Hamilton had been Argentinean? A Comparison of the Early Monetary Experiences of Argentina and the United States». Journal of Monetary Economics, 49 (3), pp. 459-494.

L. E. Davis R. E. Gallman (2001): Evolving Financial Markets and International Capital Flows: Britain, The Americas, and Australia, 1865-1914. Japan–U.S. Center Sanwa Monographs on International Financial Markets. Cambridge: Cambridge University Press.

G. della Paolera A. M. Taylor (2003): «Gaucho Banking Redux». Economía, 3 (2), pp. 1-42.

G. della Paolera A. M. Taylor (2001): «Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935». NBER Series on Long-Term Factors in Economic Growth. Chicago: University of Chicago Press.

T. Duncan (1983): «La política fiscal durante el gobierno de Juárez Celman, 1886-1890: una audaz estrategia financiera internacional». Desarrollo Económico, 23, pp. 11-34.

W. Easterly R. Levine (2001): «What Have We Learned From a Decade of Empirical Research on Growth? It's Not Factor Accumulation: Stylized Facts and Growth Models». World Bank Economic Review, 15 (2), pp. 177-219.

J. Eaton M. Gersovitz (1981): «Debt with Potential Repudiation: Theoretical and Empirical Analysis». Review of Economic Studies, 48 (2), pp. 289-309.

B. Eichengreen (1999): «The Baring Crisis in a Mexican Mirror». International Political Science Review, 20 (3, pp. 249-270.

N. Ferguson M. Schularick (2006): «The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880-1913». Journal of Economic History, 66 (2), pp. 283-312.

N. Ferguson M. Schularick (2012): «The «Thin Film of Gold»: Monetary Rules and Policy Credibility’». European Review of Economic History, 16 (4), pp. 384-407.

E. L. Glaeser ; R. La Porta ; F. Lopez-de-Silanes A. Shleifer (2004): «Do Institutions Cause Growth?». Journal of Economic Growth, 9 (3), pp. 271-303.

R. E. Hall C. I. Jones (1999): «Why Do Some Countries Produce So Much More Output Per Worker Than Others?». Quarterly Journal of Economics, 114 (1), pp. 83-116.

K. M. Kletzer B. D. Wright (2000): «Sovereign Debt as Intertemporal Barter». American Economic Review, 90 (3), pp. 621-639.

P. Mauro ; N. Sussman Y. Yafeh (2006): Emerging Markets and Financial Globalization: Sovereign Bond Spreads in 1870-1913 and Today. Oxford: Oxford University Press.

C. M. Meissner (2005): «A New World Order: Explaining the International Diffusion of the Gold Standard, 1870-1913». Journal of International Economics, 66 (2), pp. 385-406.

K. J. Mitchener M. Weidenmier (2005): «Empire, Public Goods, and the Roosevelt Corollary». Journal of Economic History, 65 (3), pp. 658-692.

K. J. Mitchener M. Weidenmier (2008): «The Baring Crisis and the Great Latin American Meltdown of the 1890s». Journal of Economic History, 68 (2), pp. 462-500.

D. C. North R. P. Thomas (1973): The Rise of the Western World: A New Economic History. New York: Cambridge University Press.

M. Obstfeld A. M. Taylor (2003): «Sovereign Risk, Credibility, and the Gold Standard: 1870-1913 versus 1925-31». Economic Journal, 113 (487), pp. 1-35.

M. Obstfeld A. M. Taylor (2004): Global Capital Markets: Integration, Crisis, and Growth. Japan–U.S. Center Sanwa Monographs on International Financial Markets Cambridge: Cambridge University Press.

C. M. Reinhart K. S. Rogoff (2004): «Serial Default and the «Paradox» of Rich-to-Poor Capital Flows». American Economic Review, 94 (2), pp. 53-58.

A. M. Taylor J. G. Williamson (1994): «Capital Flows to the New World as an Intergenerational Transfer». Journal of Political Economy, 102 (2), pp. 348-371.

I. Stone (1999): Global Export of Capital from Great Britain, 1865-1914: A Statistical Survey. New York: St. Martin's Press.

R. G. King R. Levine (1993): «Finance and Growth: Schumpeter Might Be Right». Quarterly Journal of Economics, 108 (3), pp. 717-737.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Revista de Historia Economica - Journal of Iberian and Latin American Economic History
  • ISSN: 0212-6109
  • EISSN: 2041-3335
  • URL: /core/journals/revista-de-historia-economica-journal-of-iberian-and-latin-american-economic-history
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords:

Metrics

Full text views

Total number of HTML views: 3
Total number of PDF views: 29 *
Loading metrics...

Abstract views

Total abstract views: 180 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 26th June 2017. This data will be updated every 24 hours.