Circumventing credible commitment: GroningenÕs default and the Dutch RepublicÕs federal escape route, 1666-1761

Alberto Feenstra

No 75, Working Papers from Utrecht University, Centre for Global Economic History

Abstract: The Dutch Republic is frequently depicted as an early example of a stateÕs credible commitment to debt. Yet these studies tend to overlook the implications of the RepublicÕs federal structure. This paper analyses the default by the province of Groningen during the 1680Õs, at the expense of its creditors in the province of Holland. It argues that GroningenÕs unique position within the federation prevented the market to punish the province for its misbehaviour. This was not a carefully thought-out plan, but the coincidental historical outcome of the interaction between creditors and provincial and federal authorities. Ultimately, the creditors resorted to essentially medieval sanctions to enforce a solution.

Keywords: public debt; Dutch history; default; political economy; economic history (search for similar items in EconPapers)
Pages: 43 pages
Date: 2015-11
New Economics Papers: this item is included in nep-his and nep-hpe
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