The Mutualisation of Sovereign Debt: Comparing the American Past and the European Present

Armin Steinbach ()
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Armin Steinbach: Max Planck Institute for Research on Collective Goods, Bonn

No 2015_02, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This study identifies commonalities between two historical incidents of debt assumption – in the United States in 1791 and in present-day Europe. By comparing the interests and behaviour of key players in these two incidents, we find three major parallels: First, in their strategic interactions, parties both for and against debt mutualisation raise arguments based on notions of fairness and morality. Second, in both historical episodes we find harsh rhetoric levelled against private creditors, who are derided as greedy speculators. Third, bargaining is an essential element of the debt assumption process. Bargaining is directed towards limiting or expanding the scope of debt assumption. Further, bargaining typically leads to some form of conditionality imposed in order to increase the chances of the debts being repaid or to ensure benefits accrue to the parties assuming the debt.

JEL-codes: E62 F55 H63 N11 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-eec, nep-his and nep-mac
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2015_02

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