| This dissertation studies the institutional framework of the first globalized capital market, between 1870 and 1914. Within this structure, it concentrates in two main institutions---bondholders' protective organizations, and the gold standard.; Chapter 1 investigates the market for sovereign debt from the viewpoint of post-default governance. Theoretical and empirical analysis shows that the outcome of debt workouts depended on two dimensions: the institutional variation and the strategic interaction among bondholders' representatives. These aspects are addressed in a model of sovereign debt with constant renegotiation. An original data set of settlements of defaulted debts is used to test the model. Results imply that negotiation-friendly but not debtor-friendly organizations yielded the best ex post results. The representation of bondholders' interests by the issue banks, on the other hand, produced inferior outcomes.; Chapter 2 compares the patterns of foreign investment of two large capital-exporting countries before 1914---Great Britain and Germany. Three classes of variables were tested as determinants of capital flows: political conditions in recipient countries, long-term prospects of growth, and institutional characteristics. Whereas chapter 1 demonstrated the relevance of institutional quality at the lending countries, this chapter tests for the influence of institutions at the recipients of foreign investment. The empirical analysis supports the view that German capital flows responded to long-term prospects of growth of recipient countries ("fundamentals") as much as British investment. This suggests that the sharp distinction in the literature between "developmental" and "revenue" finances is probably a figment of the absence of detailed data on capital exports outside of Britain.; The stability of the gold standard before 1914 has been extensively studied. Chapter 3 is occupied with a case study, and it tries to provide sufficient understanding of the institutional foundations of exchange rate stability under the classical gold standard. The country under study, Portugal, fits in the typical "periphery" of countries characterized by persistent current account deficits. This chapter demonstrates the role in practice of large market players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation of conventional theoretical frameworks. |
