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Supersanctions and sovereign debt repayment


  • Mitchener, Kris James
  • Weidenmier, Marc D.


What might happen if a third-party entity had the power to implement fiscal reforms and/or punish sovereign debt defaulters? In contrast to recent history, extreme sanctions such as gunboat diplomacy and "fiscal house arrest" were used to punish debt defaulters during the period 1870-1913. We find that, after a "supersanction" was imposed, a country improved its fiscal discipline. As a result, ex ante default probabilities on new issues fell dramatically and the country spent no additional time in default. Our results suggest some type of external fiscal or monetary control may be effective in imposing discipline on serial debt defaulters.

Suggested Citation

  • Mitchener, Kris James & Weidenmier, Marc D., 2010. "Supersanctions and sovereign debt repayment," Journal of International Money and Finance, Elsevier, vol. 29(1), pages 19-36, February.
  • Handle: RePEc:eee:jimfin:v:29:y:2010:i:1:p:19-36

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    References listed on IDEAS

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Greece: CanÂ’t Pay/WonÂ’t Pay? by Mark Harrison
      by Mark Harrison in Mark Harrison's blog on 2012-05-23 21:54:58


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013. "Waterloo: a Godsend for French Public Finances?," Working Papers 0041, European Historical Economics Society (EHES).
    2. Mauricio Drelichman & Joachim Voth, 2007. "Lending to the borrower from hell: Debt and default in the age of Philip II, 1556-1598," Economics Working Papers 1164, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2009.
    3. Mauricio Drelichman & Hans-Joachim Voth, 2015. "Risk sharing with the monarch: contingent debt and excusable defaults in the age of Philip II, 1556–1598," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 9(1), pages 49-75, January.
    4. repec:trp:01jefa:jefa0007 is not listed on IDEAS
    5. Graciela Laura Kaminsky & Pablo Vega-García, 2016. "Systemic And Idiosyncratic Sovereign Debt Crises," Journal of the European Economic Association, European Economic Association, vol. 14(1), pages 80-114, February.
    6. Aurore Burietz & Loredana Ureche - Rangau, 2016. "A modern Dionysus' tale: new evidence on the Greek debt crisis and the related costs," Economics Bulletin, AccessEcon, vol. 36(4), pages 1938-1950.
    7. Rui Esteves & João Tovar Jalles, 2016. "Like Father Like Sons? The Cost of Sovereign Defaults in Reduced Credit to the Private Sector," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(7), pages 1515-1545, October.
    8. Michael Tomz & Mark L.J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 247-272, May.
    9. Michael D. Bordo & Christopher M. Meissner, 2015. "Growing Up to Stability? Financial Globalization, Financial Development and Financial Crises," NBER Working Papers 21287, National Bureau of Economic Research, Inc.
    10. Mauricio Drelichman & Hans‐Joachim Voth, 2011. "Lending to the Borrower from Hell: Debt and Default in the Age of Philip II," Economic Journal, Royal Economic Society, vol. 121(557), pages 1205-1227, December.
    11. repec:eee:macchp:v2-355 is not listed on IDEAS
    12. Waldenström, Daniel, 2010. "Why does sovereign risk differ for domestic and external debt? Evidence from Scandinavia, 1938-1948," Journal of International Money and Finance, Elsevier, vol. 29(3), pages 387-402, April.
    13. Boysen-Hogrefe, Jens, 2010. "Ist Griechenland noch zu retten? Und der Euro?," Kiel Policy Brief 19, Kiel Institute for the World Economy (IfW).
    14. Alberto Feenstra, 2015. "Circumventing credible commitment: GroningenÕs default and the Dutch RepublicÕs federal escape route, 1666-1761," Working Papers 0075, Utrecht University, Centre for Global Economic History.
    15. Pittaluga, Giovanni B. & Seghezza, Elena, 2016. "How Japan remained on the Gold Standard despite unsustainable external debt," Explorations in Economic History, Elsevier, vol. 59(C), pages 40-54.
    16. Flores Zendejas, Juan, 2015. "Capital Markets and Sovereign Defaults: A Historical Perspective," Working Papers unige:73325, University of Geneva, Paul Bairoch Institute of Economic History.
    17. Hauner, Thomas & Milanovic, Branko & Naidu, Suresh, 2017. "Inequality, Foreign Investment, and Imperialism," MPRA Paper 83068, University Library of Munich, Germany.
    18. Stasavage, David, 2016. "What we can learn from the early history of sovereign debt," Explorations in Economic History, Elsevier, vol. 59(C), pages 1-16.
    19. Elmas Yaldiz Hanedar & Avni Önder Hanedar & Ferdi Çelikay, 2017. "Effects of reforms and supervisory organizations: Evidence from the Ottoman Empire and the Istanbul bourse," Working Papers 0112, European Historical Economics Society (EHES).
    20. Drelichman, Mauricio & Voth, Hans-Joachim, 2011. "Serial defaults, serial profits: Returns to sovereign lending in Habsburg Spain, 1566-1600," Explorations in Economic History, Elsevier, vol. 48(1), pages 1-19, January.
    21. Michael D. Bordo & Christopher M. Meissner, 2016. "Fiscal and Financial Crises," NBER Working Papers 22059, National Bureau of Economic Research, Inc.
    22. Rohan Pitchford & Mark L. J. Wright, 2013. "On the contribution of game theory to the study of sovereign debt and default," Oxford Review of Economic Policy, Oxford University Press, vol. 29(4), pages 649-667, WINTER.
    23. Carlo de Bassa Scheresberg, Francesco Passarelli, 2011. "Strategic Sovereign Defaults under International Sanctions," ISLA Working Papers 42, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
    24. Matthias Morys, 2016. "Financial supervision to fight fiscal dominance? The gold standard in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939," Discussion Papers 16/05, Department of Economics, University of York.


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