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The political economy of strategic default: Sweden and the international capital markets, 1810–1830

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  • Patrik Winton

Abstract

This article examines the commitment mechanisms which guided sovereign borrowing during the Napoleonic Wars by analyzing Sweden's default on its external debt in 1812. The default was driven by internal political bargaining concerning the division of resources, and the availability of subsidies provided by the major European powers. Thus, the Swedish government and the Diet made strategic choices when deciding which debts to pay. The reputational mechanisms and the creditors’ attempts to force the Swedish state to honor its commitments did not work when the government had access to foreign subsidies.

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  • Patrik Winton, 2016. "The political economy of strategic default: Sweden and the international capital markets, 1810–1830," European Review of Economic History, European Historical Economics Society, vol. 20(4), pages 410-428.
    • Handle: RePEc:oup:ereveh:v:20:y:2016:i:4:p:410-428.
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    File URL: http://hdl.handle.net/10.1093/ereh/hew009
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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
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    8. Jan Luiten van Zanden & Arthur van Riel, 2004. "Introduction to The Strictures of Inheritance: The Dutch Economy in the Nineteenth Century," Introductory Chapters, in: The Strictures of Inheritance: The Dutch Economy in the Nineteenth Century, Princeton University Press.
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    12. Cassis,Youssef, 2006. "Capitals of Capital," Cambridge Books, Cambridge University Press, number 9780521845359, September.
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    Cited by:

    1. Pandey, Dharen Kumar & Lucey, Brian M. & Kumar, Satish, 2023. "Border disputes, conflicts, war, and financial markets research: A systematic review," Research in International Business and Finance, Elsevier, vol. 65(C).

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