An Exorbitant Privilege in the First Age of International Financial Integration

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dc.contributor.advisorWallis, John Jen_US
dc.contributor.authorvan Hombeeck, Carlos Eduardo Velmovitskyen_US
dc.contributor.departmentEconomicsen_US
dc.contributor.publisherDigital Repository at the University of Marylanden_US
dc.contributor.publisherUniversity of Maryland (College Park, Md.)en_US
dc.date.accessioned2016-09-03T05:37:23Z
dc.date.available2016-09-03T05:37:23Z
dc.date.issued2016en_US
dc.description.abstractThe exorbitant privilege literature analyzes the positive differential returns on net foreign assets enjoyed by the United States in the last quarter of the twentieth century as the issuer of the global reserve currency. In the first age of international financial integration (1870-1914), the global reserve currency of the period was the British pound sterling. Whether the United Kingdom enjoyed a similar privilege is analyzed with a new dataset, encompassing microdata on railroad and government financial securities. The use of microdata avoids the flaws that have plagued the US studies, particularly the use of incompatible aggregate variables. New measures of Britain’s net external position provide estimates on capital gains and dividend yields. As the issuer of the global reserve currency, Britain received average revenues of 13.4% of GDP from its international investment position. The country satisfied the necessary condition for the existence of an exorbitant privilege. Nonetheless, Britain’s case is slightly different from the American one. British external assets received higher returns than were paid on external liabilities for each class, but British invested mostly in securities with low profile of risk. The low return on its net external position meant that, for most of the time, Britain would not receive positive revenues from the rest of the world if it were a net debtor country, but this pattern changed after 1900. The finding supports the claim that, at least partially, exorbitant privilege is a general characteristic of the issuer of the global reserve currency and not unique to the late twentieth century US.en_US
dc.identifierhttps://doi.org/10.13016/M2GN5F
dc.identifier.urihttp://hdl.handle.net/1903/18563
dc.language.isoenen_US
dc.subject.pqcontrolledEconomicsen_US
dc.subject.pquncontrolledExorbitant Privilegeen_US
dc.subject.pquncontrolledFinancial Aspects of Economic Integrationen_US
dc.subject.pquncontrolledFinancial Markets and Institutionsen_US
dc.subject.pquncontrolledInternational Investmenten_US
dc.subject.pquncontrolledLong-Term Capital Movementsen_US
dc.subject.pquncontrolledNet Investment Positionen_US
dc.titleAn Exorbitant Privilege in the First Age of International Financial Integrationen_US
dc.typeDissertationen_US

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