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The Baring Crisis and the Great Latin American Meltdown of the 1890s

Published online by Cambridge University Press:  01 June 2008

KRIS JAMES MITCHENER  and
MARC D. WEIDENMIER
KRIS JAMES MITCHENER
Affiliation:
Associate Professor, Department of Economics, Santa Clara University, 500 El Camino Real, Santa Clara, CA 95053. E-mail: [email protected].
MARC D. WEIDENMIER
Affiliation:
Associate Professor, Department of Economics, Claremont McKenna College, 500 East Ninth Street, Claremont, CA 91711. E-mail: [email protected].
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Abstract

The Baring Crisis is the nineteenth century's most famous sovereign debt crisis. Using a database of more than 15,000 observations, we assess its effect on emerging market borrowers and find empirical evidence of a regional crisis but not a global crisis. During the crisis, Latin American yield spreads increased by more than 200 basis points relative to the rest of the world, even after controlling for macroeconomic, trade, political-institutional factors, and other country-specific effects. Our evidence suggests that European investors may have sold off or reduced their holdings of Latin American securities in the wake of the Baring Crisis.

Type
ARTICLES
Information
The Journal of Economic History , Volume 68 , Issue 2 , June 2008 , pp. 462 - 500
Copyright
Copyright © The Economic History Association 2008

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