Democracy, Autocracy and Sovereign Debt in Mexico and Brazil during the pre-1914 Globalisation

Speaker(s): 
Leonardo Weller (Fundação Getúlio Vargas, São Paulo)
Date: 
21 February 2017

Sovereign debt is a financial as well as a political topic. Politics shapes the way governments borrow and repay. The existing historical literature on the pre-1914 sovereign debt market focuses on creditors (the supply side) and assumes that autocratic regimes are more likely to default than democracies. We claim that this model is oversimplified. In order to propose an alternative model, we research several combinations between polity and credit records across major debtors (the demand side) from 1870 to 1914. This presentation analyses some preliminary results of this broad project. It addresses two specific cases: Brazil, an oligarchic regime whose records oscillated between good and bad depending on political stability; and Mexico, an autocratic and creditworthy regime whose capacity to pay deteriorated after a democratically-elected government took office.

 

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