Political Regimes and Sovereign Credit Risk in Europe, 1750-1913
European Review of Economic History, Vol. 13, No. 1
40 Pages Posted: 25 Sep 2007 Last revised: 30 Jan 2009
Date Written: August 12, 2008
This paper uses a new panel data set to perform a statistical analysis of political regimes and sovereign credit risk in Europe from 1750 to 1913. Old Regime polities typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that centralized and/or limited regimes were associated with significant improvements in credit risk relative to fragmented and absolutist ones. Structural breaks tests also reveal close relationships between major turning points in yield series and political transformations.
JEL Classification: N23, P16, O16
Suggested Citation: Suggested Citation