Enough Potential Repudiation: Economic and Legal Aspects of Sovereign Debt in the Pandemic Era

Anna Gelpern () and Ugo Panizza
Additional contact information
Anna Gelpern: Georgetown University Law Center, Washington, DC, USA

Annual Review of Economics, 2022, vol. 14, issue 1, 545-570

Abstract: This article reviews recent economic and legal literature on sovereign debt in light of the COVID-19 shock. Most of the core theoretical contributions across the two disciplines hinge on immunity, and the sovereign borrower's consequent inability to commit to repay foreign creditors, as the distinguishing attribute of sovereignty. We highlight a persistent gap between sovereign debt theories grounded in immunity and empirical evidence that the governments of low- and middle-income countries borrow far more than theory would predict. On the other hand, the governments of advanced economies, generally viewed as outside the scope of this literature before the euro area debt crisis, have shown themselves to be far more commitment challenged than previously supposed. We conclude that the traditional split between a literature concerned with developing economy sovereigns that repudiate debt and one concerned with advanced economies that do not is no longer appropriate (if ever it was). We argue that shifting some attention away from immunity to a different attribute of sovereignty—authority—could help bridge the gap between the two literatures.

Keywords: sovereign debt; sovereign default; public debt (search for similar items in EconPapers)
JEL-codes: F30 F34 G15 K12 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1146/annurev-economics-051420-015731
Full text downloads are only available to subscribers. Visit the abstract page for more information.

Related works:
Working Paper: Enough Potential Repudiation: Economic and Legal Aspects of Sovereign Debt in the Pandemic Era (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anr:reveco:v:14:y:2022:p:545-570

Ordering information: This journal article can be ordered from
http://www.annualreviews.org/action/ecommerce

DOI: 10.1146/annurev-economics-051420-015731

Access Statistics for this article

More articles in Annual Review of Economics from Annual Reviews Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA.
Bibliographic data for series maintained by http://www.annualreviews.org ().