DP5940 The Bell Jar: Commercial Interest Rates between Two Revolutions, 1688-1789

Author(s): Marc Flandreau , Christophe Galimard , Clemens Jobst , Maria Del Pilar Nogués Marco

Publication Date: November 2006

Keyword(s): financial integration , interest rates , financial development , early financial derivative products

JEL(s): F31 , N23

Programme Areas: International Macroeconomics

Initiatives: Economic History

Link to this Page: www.cepr.org/pubs/dps/DP5940.asp.asp

This paper exploits arbitrage conditions for bills of exchange with different maturities to provide new evidence on commercial interest rates in Amsterdam, London, and Paris during the 18th century. The lesson that emerges is that commercial interest rates were very low in all three centers and did not differ much from one location to another. This suggests that a transnational capital market resulting from the Commercial Revolution pre-dated to the British 'Financial Revolution' of the 18th century.