BEGIN:VCALENDAR
VERSION:2.0
PRODID:-//Talks.cam//talks.cam.ac.uk//
X-WR-CALNAME:Talks.cam
BEGIN:VEVENT
SUMMARY:Institutions\, Deficits or Wars\, on the determinants of the borro
 wing costs of the British government: 1688-1850 and beyond - Professor Nat
 han Sussman\, The Hebrew University of Jerusalem
DTSTART:20110207T170000Z
DTEND:20110207T190000Z
UID:TALK27117@talks.cam.ac.uk
CONTACT:D'Maris Coffman
DESCRIPTION:We present historical data on sovereign bond spreads drawn fro
 m 300 years of data (from the \nlate seventeenth century to the late twent
 ieth century)\, which appear to be inconsistent with \nthe North and Weing
 ast (1989) view that institutional changes and reforms can reduce the \nco
 st of government debt soon after they are implemented. Extended time serie
 s data on \nBritish government debt from the late seventeenth century unti
 l 1850 show that\, for over a \ncentury after the Glorious Revolution and 
 even in the nineteenth century\, wars and episodes \nof instability were a
  significant and robust determinant of the risk premium on British \ngover
 nment debt. Furthermore\, we show that the effect of wars on the cost of d
 ebt is due in \npart to an increase in  “country risk”  not only to wa
 r-induced budget deficits. We are able to \nreject the view (Barro\, 1987)
  that the increase in interest rates was due to the effect of \ntemporary 
 increases in government spending. Results reproduced from Sussman and Yafe
 h \n(2000) suggest that in nineteenth century Japan\, as well as in large 
 samples of emerging \nmarkets in the period 1870-1913 and in the 1990s (Ma
 uro\, Sussman and Yafeh\, 2006) wars \nand political instability were stro
 ngly correlated with the cost of debt\, whereas institutional \nchanges we
 re not. Our overall reading of the historical evidence is therefore that i
 nstitutional \nreforms rarely have a rapid and significant impact on bond 
 spreads which tend to respond\, at \nleast in the short run\, primarily to
  crises and instability.   \n\nThis is joint work with Yishay Yafeh.
LOCATION:Lucia Windsor Room\, Newnham College
END:VEVENT
END:VCALENDAR