Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Economics Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26117

Title: The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880-1913
Authors: Ferguson, Niall
Schularick, Moritz
Issue Date: 2004
Series/Report no.: EC-04-03
Abstract: This paper reassesses the importance of colonial status to investors before 1914 by means of multivariable regression analysis of the data available to contemporaries. We show that British colonies were able to borrow in London at significantly lower rates of interest than non-colonies precisely because of their colonial status, which mattered more than either gold convertibility or a balanced budget. Allowing for differences not only in monetary and fiscal policy but also in economic development and location, the “Empire effect” was a discount of around 100 basis points. We conclude that investors saw colonial status as a no-default guarantee.
URI: http://hdl.handle.net/2451/26117
Appears in Collections:Economics Working Papers

Files in This Item:

File Description SizeFormat
4-3.pdf353.91 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.


The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS