Default, rescheduling and inflation : debt crisis in Spain during the 19th and 20th centuries
AbstractThis article provides a historical overview of the factors leading up to debt crises and the default methods used by the governments to solve them, ranging from repudiation and restructuring to inflation tax and financial repression. The paper also analyses the Spanish governments’ graduation to responsible public debt management under the democracy and the last debt crisis starting in 2010. After analysing the evolution of the outstanding public debt, the budget deficits, the Spanish economy’s ability to borrow, the central government’s debt affordability and the profile of the sovereign debt the article concludes that the Spanish case confirms the main hypothesis of Reinhart and Rogoff (2009) about international debt crisis, regarding to: short term borrowing enhanced the risk of a debt crisis; insolvency problems arose when the governments were unwilling or unable to repay the debt; debt crisis took place after large capital inflows; most outright defaults ended up being partial defaults; sovereign debt level became unsustainable when it rose above 60-90 % of GDP; default trough inflation became commonplace when fiat money displaced coinage; financial repression was used as a subtle type of debt restructuring; defaults endangered the creditworthiness of Spanish Finance Ministry and forced disciplined fiscal policies
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Historia Económica e Instituciones in its series Working Papers in Economic History with number wp12-06.
Date of creation: Jun 2012
Date of revision:
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Public debt; Default; Restructuring; Inflation tax; Financial repression; Fiscal policy;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- H6 - Public Economics - - National Budget, Deficit, and Debt
- N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
- N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
- N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-14 (All new papers)
- NEP-HIS-2012-07-14 (Business, Economic & Financial History)
- NEP-MAC-2012-07-14 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Growth in a Time of Debt,"
CEPR Discussion Papers
7661, C.E.P.R. Discussion Papers.
- Carmen M. & M. Belen Sbrancia, 2011.
"The Liquidation of Government Debt,"
Working Paper Series
WP11-10, Peterson Institute for International Economics.
- Carmen M. Reinhart & Vincent R. Reinhart & Kenneth S. Rogoff, 2012. "Debt Overhangs: Past and Present," NBER Working Papers 18015, National Bureau of Economic Research, Inc.
- Nikolaus Wolf, 2012. "Crises and Policy Responses within the Political Trilemma: Europe, 1929-1936 and 2008-2011," Working Papers 0016, European Historical Economics Society (EHES).
- Jose Luis Cardoso & Pedro Lains, 2009. "Paying for the liberal state: the rise of public finance in nineteenth century Europe," Working Papers in Economic History wp09-03, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
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