Sovereigns versus Banks: Credit, Crises, and Consequences

The views expressed herein are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco, the Board of Governors of the Federal Reserve System, or the National Bureau of Economic Research. The authors gratefully acknowledge financial support from the Smith-Richardson Foundation. This work is part of a larger project kindly supported by a research grant from the Institute for New Economic Thinking (INET) administered by UC Davis. Schularick received financial support from the Volkswagen Foundation. For helpful comments we thank Michael Bordo, Linda Goldberg, Sebnem Kalemli-Ozcan, Romain Rancière, Carmen Reinhart, Kenneth Rogoff, and Aaron Tornell, as well those who attended presentations at the NBER Summer Institute Sovereign Debt and Financial Crises Pre-Conference, Cambridge, Mass., July 2012; the first CEPR Economic History Programme Meeting, Perugia, Italy, April 2013; the Swiss National Bank, Zurich, Switzerland, June 2013; the NBER Summer Institute DAE Meeting, Cambridge, Mass., July 2013; the Economic History Association, Arlington, September 2013; the San Francisco Fed and INET conference Finance and the Welfare of Nations, September 2013; the University of Zurich, October 2013; the Center for Latin American Monetary Studies (CEMLA), Mexico City, October 2013; the Hong Kong Monetary Authority (HKMA), the City University of Hong Kong, the Hong University of Science and Technology, the Bank of Japan, the Austrian National Bank, in November 2013; the Bank for International Settlements, the European Central Bank Financial Research Division, the Paris School of Economics Macro Seminar, the Banque de France Conference on Cross-Border Banking, and the European Commission Seminar, Brussels, in December 2013. We are particularly grateful to Early Elias and Niklas Flamang for outstanding research assistance. All errors are ours.

• October 3, 2013