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The Dubious Ethics of Debt Default

Author

Listed:
  • Geoffrey Brennan

    (ANU University of Rome)

  • Giuseppe Eusepi

    (ANU University of Rome)

Abstract

This article is an engagement with a piece of Buchanan’s on the ethics of debt default, in which Buchanan proved to be surprisingly sympathetic to debt default as an option. Debt default is a current period transfer from bondholders to taxpayers at large. Default cannot then serve to improve, in aggregate, the lot of the generation whose bequest receipts may have been diminished by the use of debt financing. Current generations of taxpayers may have a legitimate complaint against past generations of voters/taxpayers who used debt financing (and reduced their net bequests thereby), but that past generation is beyond the grave and cannot provide recompense.

Suggested Citation

  • Geoffrey Brennan & Giuseppe Eusepi, 2002. "The Dubious Ethics of Debt Default," Public Finance Review, , vol. 30(6), pages 546-561, November.
    • Handle: RePEc:sae:pubfin:v:30:y:2002:i:6:p:546-561
    DOI: 10.1177/109114202238002
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    Cited by:

    1. Seema Jayachandran & Michael Kremer, 2006. "Odious Debt," American Economic Review, American Economic Association, vol. 96(1), pages 82-92, March.
    2. Ernesto Longobardi & Antonio Pedone, 2018. "On some recent proposals of public debt restructuring in the Eurozone," Chapters, in: Giuseppe Eusepi & Richard E. Wagner (ed.), Debt Default and Democracy, chapter 6, pages 84-123, Edward Elgar Publishing.
    3. repec:ces:ifodic:v:14:y:2017:i:4:p:19267794 is not listed on IDEAS
    4. Giuseppe Eusepi, 2020. "From subjectivism to constitutionalism: the intellectual journey of James M. Buchanan through his Italian heroes," Public Choice, Springer, vol. 183(3), pages 273-285, June.
    5. Andrea Rieck & Ludger Schuknecht, 2017. "Preserving Government Solvency: A Global Policy Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(04), pages 71-81, February.
    6. Giuseppe Eusepi, 2021. "Richard M. Salsman, The Political Economy of Public Debt: Three Centuries of Theory and Evidence. Cheltenham, UK, Northampton, MA: Edward Elgar, 2017. Viii + 322 pages. USD 140.00 (hardcover)," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 34(3), pages 419-423, September.
    7. Andrea Rieck & Ludger Schuknecht, 2017. "Preserving Government Solvency: A Global Policy Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(4), pages 71-81, 02.

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