Interest Reductions in the Politico-Financial Nexus of 18th Century England

Abstract : In the 1730s and 1750s the English government proposed to refinance the redeemable debt by "lowering the interest rate." In the ensuing coordination game among creditors, large investors like the Bank of England could block the policy change by demanding cash. Using 4 percent and 3 percent annuities prices to analyze market expectations, this article studies two refinancing episodes with very different fates. Lord Barnard failed in 1737 because his terms were too strict and financial agents induced a temporary market crash. Lord Pelham succeeded in 1750 because his better terms fit market prices, and interest rates had fallen much faster than expected.
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Article dans une revue
Journal of Economic History, Cambridge University Press (CUP), 2011, 71 (3), pp.555-589. 〈10.1017/S0022050711001847〉
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Soumis le : mardi 20 novembre 2012 - 09:51:36
Dernière modification le : jeudi 11 janvier 2018 - 06:23:25

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Christophe Chamley. Interest Reductions in the Politico-Financial Nexus of 18th Century England. Journal of Economic History, Cambridge University Press (CUP), 2011, 71 (3), pp.555-589. 〈10.1017/S0022050711001847〉. 〈halshs-00754521〉

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