Chavaz, Matthieu, Flandreau, Marc, (2016), “Liquidity in government bonds – from the British Empire to the Eurozone”, VoxEu, 1 December
Between 1870 and 1914, 68 countries – both sovereign and British colonies – used the London Stock Exchange to issue bonds. This column argues that bond prices and spreads in this period show that the colonies’ semi-sovereignty lowered credit risk at the price of higher illiquidity risk, and further worsened liquidity by attracting investors that rarely traded. Parallels between Eurozone and colonial bonds suggest that the pricing of liquidity and credit in government bond markets is an institutional phenomenon.
Relevant Posts
- Ongena, Steven, Popov, Alexander, Van Horen, Neeltje, (2016), “The invisible hand of the government: “Moral suasion” during the European sovereign debt crisis”, Centre for Economic Policy Research, March
- Forni, Lorenzo, Palomba, Geremia, Pereira, Joana, Richmond, Christine J., (2016), “Sovereign Debt Restructuring and Growth”, IMF Publications, Working Paper No. 16/147, 22 July