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Default, rescheduling and inflation: public debt crises in Spain during the 19th and 20th centuries*

  • Francisco Comín (a1)

This article provides a historical overview of the factors leading up to debt crises and the default mechanisms used by governments to solve them, ranging from repudiation and restructuring to inflation tax and financial repression. The paper also analyses the Spanish governments’ graduation to responsible public debt management under democracy and the last debt crisis starting in 2010. After analysing the evolution of the outstanding public debt, budget deficits, the Spanish economy's ability to borrow, the central government's debt affordability and the profile of public debt, the article concludes that the Spanish case confirms the main hypotheses of concerning international debt crises: short-term borrowing enhanced the risk of a debt crisis; insolvency problems arose when governments were unwilling or unable to repay debt; debt crises took place after large capital inflows; most outright defaults ended up being partial defaults; public debt level became unsustainable when it rose above 60-90 per cent of GDP; default trough inflation became commonplace when fiat money displaced coinage; financial repression was used as a subtle type of debt restructuring; and defaults endangered the creditworthiness of the Spanish Finance Ministry and forced disciplined fiscal policies.


Este artículo proporciona una visión histórica de los factores que crearon las crisis de la deuda y de los métodos utilizados por los gobiernos para resolverlas: el repudio, la restructuración,el impuesto inflacionista y la represión financiera. También analiza la graduación de los gobiernos españoles en la gestión responsable de la deuda pública en la democracia.Se analiza la evolución de la deuda pública en circulación, los déficits presupuestarios, la capacidad endeudamiento de la economía española y del gobierno, así como el perfil de la deuda soberana. El artículo concluye que el caso español confirma las hipótesis principales sobre las crisis internacionales la deuda con respecto a: los préstamos a corto plazo aumentaban el riesgo de las crisis de la deuda; los impagos ocurrieron cuando los gobiernos no quisieron o no pudieron pagar la deuda;las crisis de la deuda tuvieron lugar después de grandes entradas de capital extranjero; las bancarrotas acabaron convirtiéndose en restructuraciones; la deuda soberana se hizo insostenible cuando superó el 60-90% del PIB; la inflación se convirtió en la forma general de impago cuando el dinero fiduciario desplazó a las monedas metálicas; la represión financiera se utilizó como la forma más sutil de restructuración de la deuda; los impagos hicieron peligrar la solvencia de del Ministerio de Hacienda y obligaron a realizar políticas fiscales restrictivas.

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I am very grateful to Pablo Martín-Aceña, Elena Martínez and María Ángeles Pons for inviting me to deliver this paper to the two conferences they organised on financial crises at the Pablo de Olavide University in Carmona (Seville) and at the Fundación Areces in Madrid and for their helpful comments. I would also like to thank the participants at these conferences for their useful suggestions and comments, especially Gerardo della Paollera. Finally, I wish to thank Leandro Prados de la Escosura, Andrés Hoyo, Javier Moreno and Joaquín Cuevas for data and valuable suggestions.

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

F. Comín (2010): «Public Finance and the Rise of the Liberal State in Spain, 1808-1914», in J. L. Cardoso, and P. Lains (eds), Paying for the Liberal State. The Rise of the Public Finance in Nineteenth-Century Europe. Cambridge: Cambridge University Press, pp. 214-250.

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Revista de Historia Economica - Journal of Iberian and Latin American Economic History
  • ISSN: 0212-6109
  • EISSN: 2041-3335
  • URL: /core/journals/revista-de-historia-economica-journal-of-iberian-and-latin-american-economic-history
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