Review essay: rethinking sovereign default

Scholars continue to debate why states repay their debts to foreign creditors. The existing literature stresses the short-term economic and political costs that deter default, focusing on reputational damage, creditor reprisals, spillover costs and loss of office. International Relations scholars and economists have largely tested these explanations using quantitative methods, framing their analyses as a choice between default and non-default driven by the rational interests of states or actors within them. The three books considered here draw on qualitative methods to refine and sometimes challenge the prevailing wisdom, offering valuable insights concerning the many types and wider-ranging causes of sovereign default. These books reveal that default is not a binary outcome but instead a spectrum ranging from unilateral repudiation through to cooperative restructuring. Furthermore, governments sometimes default for economically irrational reasons, reflecting shifts in domestic-political interests or changes in state identity. This new literature also raises important questions for future researchers, especially about when default can be beneficial and how it can affect long-term relations between states.