Government Debt Crises: Politics, Economics and History
14 – 15 December 2012
This year’s conference on “Government Debt Crises: Politics, Economics, and History” was the fourth in an annual series organised in tandem by the Graduate Institute of International and Development Studies and the Pierre du Bois Foundation for Current History. The conference brought together leading scholars from economics, international political economy, economic history, political science, and finance to provide a trans-disciplinary perspective on debt crises.
The recent European crisis, which coincided with the 30th anniversary of the Latin American debt crisis, has again raised important issues which have been part of the international policy debate over at least the past century. An important aspect of this conference was that, while Europe has developed its own brand of problems, its experience is not unique. It was the aim of this conference to explore the many relevant parallels between the recent European experience and those experiences of previous government debt crises.
The first panel examined what lessons can be learned from previous debt crises in Germany. Albrecht Ritschl presented his paper on the German interwar debt crisis and its resolution in the 1950s. Mark Weidemaier presented on the history of collective action clauses; research that began as an investigation of Nazi Germany’s attempt to consolidate its foreign debt and address its foreign exchange problems.
The second panel delved into litigious issues in government debt crises. Marc Flandreau revisited the origins of the Corporation of Foreign Bondholders in Britain. Julian Schumacher analysed lawsuits filed against developing country debtor governments following sovereign default or restructuring.
The third panel investigated previous debt crises in France. Tim Le Goff assesses how France restructured wartime short-term state debt after the crash of 1788. Nicolas Delalande looked at the manner in which the French government used economic, political, and legal means to protect the credit of the state from speculation during the interwar period.
The fourth session moved across the Atlantic to consider what lessons can be learned from American debt crises. Franklin Noll evaluated how the United States handled war debt in the wake of the U.S. Civil War. John Wallis determined how American states incurred heavy debts, defaulted, and redid their constitutions to limit the ability of state governments to incur debts between 1837 and 1857.
The fifth session placed particular emphasis on the role of gatekeepers in debt crises. Gabriel Geisler presented his research on Havas’ media coverage of foreign loans in France. Ugo Panizza presented on the role that reputation played in the interwar debt crisis in the United States. Mitu Gulati looked at the role that lawyers play as gatekeepers in sovereign debt markets.
The sixth and final panel of the conference moved eastward to explore Hellenistic debt crises. During this session, Alexandros Apostolides presented his findings on the manner in which a small deficit in Cyprus created a political impasse during the interwar period due to the inflexibility of the British colonial finance structure.
Important and yet to be fully understood issues related to debt crises include: the ability or inability of markets to monitor debt accumulation, the logic of government debt crises including the forms and patterns of speculation and policy remedies, the political economy of debt crises, the interaction between political models (federalism, confederalism) and crises, constitutional remedies (“golden rule”), regulatory remedies, relations with central banks, etc. Government Debt Crises: Politics, Economics, and History addressed these issues and we hope that the conference contributed to a better understand of debt crises worldwide.