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Issued date: 2006-10

Serie-No.: Working Papers in Economic History2006-11

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:In 1891 a financial crisis led Portugal to abandon the gold standard and to partially default by cutting interest payments on domestic and foreign debt. As a consequence, the country was banned from borrowing in international financial markets, until an agreemIn 1891 a financial crisis led Portugal to abandon the gold standard and to partially default by cutting interest payments on domestic and foreign debt. As a consequence, the country was banned from borrowing in international financial markets, until an agreement with foreign bondholders was reached in 1902. That financial crisis was the result of large current account and government deficits. Yet the abandonment of the gold standard and default were not imposed by financial difficulties only. This paper shows that such options were taken because of the growing domestic consensus regarding the need for a change in monetary policies. The concern about the domestic economy was more important to the Portuguese governments than the fear of a negative reaction of foreign bondholders. Insufficient information about the sustainability of government debt and lack of cooperation between borrowers left the Portuguese governments with space to manoeuvre according to their domestic political interests+-





Autor: Lains, Pedro

Fuente: http://e-archivo.uc3m.es


Introducción



Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Instituto Figuerola de Historia y Ciencias Sociales IFCS - Working Papers in Economic History.WH 2006-10 The power of peripheral governments : coping with the 1891 financial crisis in Portugal Lains, Pedro http:--hdl.handle.net-10016-484 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid UNIVERSIDAD CARLOS III DE MADRID Working Papers in Economic History October 2006 WP 06-11 The power of peripheral governments: coping with the 1891 financial crisis in Portugal. Pedro Lains Abstract In 1891 a financial crisis led Portugal to abandon the gold standard and to partially default by cutting interest payments on domestic and foreign debt.
As a consequence, the country was banned from borrowing in international financial markets, until an agreement with foreign bondhold ers was reached in 1902.
That financial crisis was the result of large current account and government deficits.
Yet the abandonment of the gold standard and default were not imposed by financial difficulties only.
This paper shows that such options were taken because of the growing domestic consensus regarding the need for a change in monetary policies.
The concern about the domestic economy was more important to the Portuguese governments than the fear of a negative reaction of foreign bondholders.
Insufficient information about the sustainability of government debt and lack of cooperation between borrowers left the Portuguese governments with space to manoeuvre according to their domestic political interests. JEL classification: N13, N23, N43, E50, E62 Keywords: Portugal; Gold standard; Government debt; Financial policies Pedro Lains, Instituto de Ciências Sociais, Universidade de Lisboa, Av.
Aníbal Bettencourt, 9 1700-189 Lisboa, Portugal. E-mail: pedro.lains@ics.ul.pt http:--www.ics.ul.pt-corpocientifico-plains-index.htm UNIVERSIDAD CARLOS III DE MADRID c- ...





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