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What we can learn from the early history of sovereign debt

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  • Stasavage, David

Abstract

Many people believe that the early development of sovereign debt depended on institutions, but there are two very different ways of presenting this narrative and two very different conclusions one might draw for sovereign debt today. According to the first, this was an impartial story involving executive constraints, shared governance, increased monitoring, and increased transparency — in other words things that sound unambiguously good. According to the second narrative this was a story of distributive politics. States had the best access to credit when institutions gave government creditors privileged access to decision making while restricting the influence of those who paid the taxes to reimburse debts. This was a situation where institutions fostered commitment, but at a cost, and sometimes they may not even have been welfare enhancing. In this paper I present evidence from seven centuries of European history, and I suggest that available data support the distributive politics interpretation. I then draw implications for how we think about the politics of sovereign debt today.

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  • Stasavage, David, 2016. "What we can learn from the early history of sovereign debt," Explorations in Economic History, Elsevier, vol. 59(C), pages 1-16.
    • Handle: RePEc:eee:exehis:v:59:y:2016:i:c:p:1-16
    DOI: 10.1016/j.eeh.2015.09.005
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    3. Klump, Rainer, 2022. "Schulden und Staatlichkeit: Überlegungen zur Politischen Ökonomie des Schuldenstaats," IBF Paper Series 06-22, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
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    5. Mario Coccia, 2018. "National debts and government deficits within European Monetary Union: Statistical evidence of economic issues," Papers 1806.07830, arXiv.org.
    6. Ma, Debin & Rubin, Jared, 2019. "The Paradox of Power: Principal-agent problems and administrative capacity in Imperial China (and other absolutist regimes)," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 277-294.
    7. Elmas Yaldiz Hanedar & Avni Önder Hanedar & Ferdi Çelikay, 2017. "Effects of reforms and supervisory organizations: Evidence from the Ottoman Empire and the Istanbul bourse," Working Papers 0112, European Historical Economics Society (EHES).
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    9. Andreea-Alexandra Maerean & Maja Pedersen & Paul Sharp, 2021. "Sovereign Debt and Supersanctions in Emerging Markets: Evidence from Four Southeast European Countries, 1878-1913," Working Papers 0216, European Historical Economics Society (EHES).
    10. Coccia, Mario, 2017. "Asymmetric paths of public debts and of general government deficits across countries within and outside the European monetary unification and economic policy of debt dissolution," The Journal of Economic Asymmetries, Elsevier, vol. 15(C), pages 17-31.
    11. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.

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