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Empire, Public Goods, and the Roosevelt Corollary

Published online by Cambridge University Press:  26 August 2005

KRIS JAMES MITCHENER
Affiliation:
Kris Mitchener is Assistant Professor, Department of Economics, Santa Clara University, and Faculty Research Fellow, NBER. E-mail: kmitchener@scu.edu.
MARC WEIDENMIER
Affiliation:
Marc Weidenmier is Assistant Professor, Department of Economics, Claremont McKenna College, and Faculty Research Fellow, NBER. E-mail: marc.weidenmier@claremontmckenna.edu.

Abstract

In 1904 the Roosevelt Corollary to the Monroe Doctrine proclaimed that the United States would intervene in the affairs of unstable Central American and Caribbean countries that did not pay their debts. We find that the average sovereign debt price for countries under the U.S. “sphere of influence” rose by 74 percent in response to the pronouncement and actions to make it credible. We use this policy change to show that the United States subsequently acted as a regional hegemon and provided the global public goods of increased financial stability and peace. Reduced conflict spurred export growth and better fiscal management, but debt settlements were driven primarily by gunboat diplomacy.

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ARTICLES
Copyright
© 2005 The Economic History Association

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