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Sovereign debt in Latin America, 1820-1913*

Published online by Cambridge University Press:  09 August 2013

Gerardo della Paolera  and
Alan M. Taylor
Gerardo della Paolera
Affiliation:
Universidad de San Andrés and Central European University, Vito Dumas 284, 1644 Victoria, Buenos Aires, Argentina. [email protected]
Alan M. Taylor
Affiliation:
University of California, Davis, NBER, and CEPR, 1 Shields Ave., Davis, CA 95616, [email protected]
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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.

Keywords

Public DebtSovereign RiskSovereign DefaultsReputationCapital FlowsCrisesRestructuringsF34H63N16N26N46Deuda PúblicaRiesgo SoberanoDefaults SoberanosReputaciónFlujo de CapitalesCrisisReestructuración
Type
Articles/Artículos
Information
Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 31 , Issue 2 , September 2013 , pp. 173 - 217
Copyright
Copyright © Instituto Figuerola de Historia y Ciencias Sociales, Universidad Carlos III de Madrid 2013 

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Footnotes

*

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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