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The Political Economy of Government Debt in England (1693-1800): War, Liquidity, and Institutional Innovation

Szakaly, Kristin E. (1992) The Political Economy of Government Debt in England (1693-1800): War, Liquidity, and Institutional Innovation. Social Science Working Paper, 794. California Institute of Technology , Pasadena, CA. (Unpublished)

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Economists and historians have offered several explanations for the significant fluctuations in 1 8th century British government interest rates. This article discusses their short-comings and supports the thesis that the fluctuations in interest rates were largely a function of England's participation in large-scale wars. The risks facing the government-being deposed in the event the war is lost or defaulting on loans because of a shortfall in revenues-hurt their "credit worthiness" in the eyes of investors. Thus, lenders demanded high interest rates to compensate themselves for investing in risky government loans.

Item Type:Report or Paper (Working Paper)
Additional Information:I would like to thank my thesis advisor, D. Roderick Kiewiet, for his many helpful comments, and Lance Davis, Philip Hoffman, and Kenneth Sokoloff who encouraged me to research this topic and offered useful suggestions and criticisms on the countless number of earlier drafts of this paper. I am also grateful for advice from Eric Hughson. Peter Bossaerts and Jeffrey Dubin.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:794
Record Number:CaltechAUTHORS:20170829-152307489
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80926
Deposited By: Jacquelyn Bussone
Deposited On:30 Aug 2017 17:33
Last Modified:03 Oct 2019 18:36

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