Risk sharing with the monarch: Excusable defaults and contingent debt in the age of Philip II, 1556-1598
Mauricio Drelichman and
Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Contingent sovereign debt can create important welfare gains. Nonetheless, there is almost no issuance today. Using hand-collected archival data, we examine the first known case of large-scale use of state-contingent sovereign debt in history. Philip II of Spain entered into hundreds of contracts whose value and due date depended on verifiable, exogenous events such as the arrival of silver fleets. We show that this allowed for effective risk-sharing between the king and his bankers. The existence of statecontingent debt also sheds light on the nature of defaults – they were simply contingencies over which Crown and bankers had not contracted previously.
Keywords: sovereign debt; syndication; diversification; risk transfer; Spain (search for similar items in EconPapers)
JEL-codes: F34 G15 N23 (search for similar items in EconPapers)
Date: 2011-06, Revised 2013-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://econ-papers.upf.edu/papers/1284.pdf Whole Paper (application/pdf)
Working Paper: Risk Sharing with the Monarch: Excusable Defaults and Contingent Debt in the Age of Philip II, 1556-1598 (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1284
Access Statistics for this paper
More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ().