Arthur Grinath III
Microeconomic Consulting &
Research Associates, Inc.
Institutional Affiliation: Microeconomic Consulting & Research Associates, Inc.
NBER Working Papers and Publications
|September 2004||Sovereign Debt and Repudiation: The Emerging-Market Debt Crisis in the U.S. States, 1839-1843|
with John Joseph Wallis, Richard E. Sylla: w10753
In 1841 and 1842, eight states and the Territory of Florida defaulted on their sovereign debts. Traditional histories of the default crisis have stressed the causal role of the depression that began with the Panic of 1837, unexpected revenue shortfalls from canal and bank investments as a result of the depression, and an unwillingness of states to raise tax rates. This paper shows that none of these stylized facts fits the experience of states at all well. The majority of state debts in default in 1842 were contracted after the Panic of 1837; most states did not expect canal investments to return substantial revenues by 1841 and so could not experience unexpected shortfalls in those revenues; and, finally, most states were willing to raise tax rates substantially. The relationship between ...
|March 1997||Debt, Default, and Revenue Structure: The American State Debt Crisis in the Early 1840s|
with John Joseph Wallis, Richard Sylla: h0097
During the 1820s and 1830s, American state governments made large investments in canals, banks, and railroads. In the early 1840s, nine states defaulted on their debts, four ultimately repudiated all or part of their debts, and three went through substantial renegotiations. This paper examines how the states got into the debt crisis and, as a result of their earlier history, how they responded to fiscal pressure in the debt crisis. The explanation is built around revenue structures. States along the developed eastern seaboard were able to avoid politically costly property taxes, while states along the frontier were forced to rely heavily on property taxes. When faced with fiscal pressures, two of the defaulting states -- Maryland and Pennsylvania -- were able to resume debt payments, ...