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   Investment Thoughts - Academia

How Japan remained on the Gold Standard despite unsustainable external debt

 

Abstract


In the period of the classic gold standard, most peripheral countries were frequently affected by so-called sudden stops as well as by financial and currency crises. Yet pre-War Japan was an outlier. Though its level of external debt was not sustainable, Japan issued many government foreign loans to cover its current account deficits, was never affected by currency crises, and was never forced to suspend convertibility. We argue that, from the late nineteenth century until just before World War I, Japan and Britain engaged in a politico-economic exchange: Japan offered to protect Britain's economic and political interests in the Far East provided that Britain gave the rising Asian power access to financial markets—namely, in the City of London.

 

 

Journal Link

 

 

Explorations in Economic History, Volume 59, January 2016, Pages 40-54-Giovanni B. Pittaluga, Elena Seghezza

27.01.2016


 

Themes

 

Asia

Bonds

Bubbles and Crashes

Business Cycles
Central Banks

China

Commodities
Contrarian

Corporates

Creative Destruction
Credit Crunch

Currencies

Current Account

Deflation
Depression 

Equity
Europe
Financial Crisis
Fiscal Policy

Germany

Gloom and Doom
Gold

Government Debt

Historical Patterns

Household Debt
Inflation

Interest Rates

Japan

Market Timing

Misperceptions

Monetary Policy
Oil
Panics
Permabears
PIIGS
Predictions

Productivity
Real Estate

Seasonality

Sovereign Bonds
Systemic Risk

Switzerland

Tail Risk

Technology

Tipping Point
Trade Balance

U.S.A.
Uncertainty

Valuations

Yield