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Returns to Investing in Sovereign Debt: a Response to Alvarez Nogal and Chamley

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  • Drelichman, Mauricio
  • Hans-Joachim, Voth

Abstract

Alvarez-Nogal and Chamley (2015) analyze one debt contract signed by lenders to Philip II, previously discussed in Drelichman and Voth (2014). They re-examine cash flows and challenge our interpretation of this particular contract’s profitability. A closer look reveals that the alleged differences between their and our calculations simply reflect the use of conservative assumptions on our part, which systematically biased estimates of profitability downwards – as good scholarship requires if one is to argue that high profits were one of the main reasons why people lent to Philip II. We also question their use and reading of archival documents, as well as their use of basic financial economics. Finally, we document a continuing pattern of academic misconduct, including plagiarism, the misrepresentation of our findings, and the complete fabrication of a quote in order to discredit our work.

Suggested Citation

  • Drelichman, Mauricio & Hans-Joachim, Voth, 2015. "Returns to Investing in Sovereign Debt: a Response to Alvarez Nogal and Chamley," Economics working papers mauricio_drelichman-2015-, Vancouver School of Economics, revised 02 Sep 2015.
    • Handle: RePEc:ubc:bricol:mauricio_drelichman-2015-19
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    File URL: http://econ.sites.olt.ubc.ca/files/2015/09/pdf_drelichman_reply_maluenda.pdf
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    References listed on IDEAS

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    1. 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.
    2. Mauricio Drelichman & Joachim Voth, 2006. "The sustainable debts of Philip II: A reconstruction of Castile's fiscal position, 1566-1596," Economics Working Papers 1121, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2009.
    3. Álvarez Nogal, Carlos & Chamley, Christophe, 2011. "Debt policy under constraints between Philip II, the Cortes and Genoese bankers," IFCS - Working Papers in Economic History.WH wp11-06, Universidad Carlos III de Madrid. Instituto Figuerola.
    4. Drelichman, Mauricio & Voth, Hans-Joachim, 2010. "The Sustainable Debts of Philip II: A Reconstruction of Castile's Fiscal Position, 1566–1596," The Journal of Economic History, Cambridge University Press, vol. 70(4), pages 813-842, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    sovereign debt; rate of return; Philip II; early modern Spain; plagiarism;
    All these keywords.

    JEL classification:

    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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