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Institutions, Reforms, and Country Risk: Lessons from Japanese Government Debt in the Meiji Era

Published online by Cambridge University Press:  26 July 2012

Nathan Sussman  and
Yishay Yafeh
Nathan Sussman
Affiliation:
Lecturer, Economics Department, The Hebrew University, Mt. Scopus, Jerusalem 91905, Israel. Email: [email protected], [email protected].
Yishay Yafeh
Affiliation:
Lecturer, Economics Department, The Hebrew University, Mt. Scopus, Jerusalem 91905, Israel. Email: [email protected], [email protected].
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Extract

We investigate the effect of the establishment of modern institutions on the risk premium associated with Japanese government bonds traded in London between 1870 and 1914. While most institutional innovations failed to elicit an immediate market response, the adoption of the gold standard did significantly reduce the perceived risk associated with Japanese bonds. In addition, some geopolitical events, especially the military victory over Russia, improved Japan's debt capacity.

Type
Symposium: High Politics and Low Finance
Information
The Journal of Economic History , Volume 60 , Issue 2 , June 2000 , pp. 442 - 467
Copyright
Copyright © The Economic History Association 2000

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