No. 700 - What determines debt intolerance? The role of political and monetary institutions

by Raffaela Giordano and Pietro Tommasino
January 2009
Vai alla versione italiana Site Search

Why do some states default on their debt more often than others? We argue that sovereign default is the outcome of a political struggle among different groups of citizens. It is more likely to happen if: (i) domestic debt-holders are relatively weak; (ii) the the political costs of the financial turmoil typically triggered by a sovereign bankrupcy are small. We show that these conditions are in turn more likely to be present if a country lacks a well-developed financial system and/or a sufficiently independent central bank.

Published in 2011 in: European Journal of Political Economy, v. 27, 3, pp. 471-484

Full text

  1. 10 February 2009
    No. 700 - What determines debt intolerance? The role of political and monetary institutions
    PDF 411 KB