@article{ebf9f550710347868e2128cd7bf7452f,
title = "Identifying the effects of an exchange rate depreciation on country risk: Evidence from a natural experiment",
abstract = "A natural experiment is used to study exchange rate depreciation and perceived sovereign risk. France suspended coinage of silver in 1876 provoking a significant exogenous depreciation of all silver standard countries versus gold standard currencies like the British pound - the currency in which their debt was payable. The evidence suggests an exchange rate depreciation can significantly increase sovereign risk if a country is exposed to foreign currency debt. We implement a difference-in-differences estimator and find that the average silver country's spread on hard currency debt increased over ten percent relative to non-silver countries.",
keywords = "Bimetallism, Foreign currency debt, Gold standard, Sovereign risk",
author = "Bordo, {Michael D.} and Meissner, {Christopher M.} and Weidenmier, {Marc D.}",
note = "Funding Information: We thank Marc Flandreau, Ricardo Hausmann, Angela Redish, Pierre SicSic, Alan M. Taylor, several anonymous referees, James Lothian and participants in talks at the ASSA/Clio Meetings, Birmingham, Dartmouth, Harvard, London School of Economics, Manchester, Oxford, the Economic History Society and the Economic History Association Conference for comments on an early draft. Antonio David and Rafael de Hoyos provided able research assistance. Michael Clemens, Klas Fregert, Lars Jonung, Masato Shizume, and Jeff Williamson helped with the data. Funding from the University of Cambridge's Department of Applied Economics and the UK's ESRC grant RES 156-25-0014 is gratefully acknowledged. Part of this work was carried out while Meissner was visiting the Bank of England as a Houblon Norman George Fellow. The Bank's hospitality is greatly appreciated. Any errors are solely the responsibility of the authors.",
year = "2009",
month = oct,
doi = "https://doi.org/10.1016/j.jimonfin.2008.10.004",
language = "American English",
volume = "28",
pages = "1022--1044",
journal = "Journal of International Money and Finance",
issn = "0261-5606",
publisher = "Elsevier BV",
number = "6",
}