Sovereign Default in the US

24 Pages Posted: 15 Mar 2016

Date Written: March 14, 2016


In the absence of a judicial mechanism to reduce the debt burden of a sovereign member of our Union, the resolution process can be quick but perhaps too indifferent to the health, safety, and welfare of the affected residents. In this paper, I use evidence from the Arkansas state archives to provide a description of the events surrounding the default of the state in 1933. I examine the evolution of the negotiations, the outcomes, and the role of fiscal policy.

Keywords: sovereign default, municipal bankruptcy, Great Depression, Arkansas highway bonds

JEL Classification: N22, H74, G01, K10

Suggested Citation

Ergungor, Ozgur Emre, Sovereign Default in the US (March 14, 2016). FRB of Cleveland Working Paper No. 16-09. Available at SSRN: or

Ozgur Emre Ergungor (Contact Author)

affiliation not provided to SSRN

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