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Sovereign Default in the US

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.

JEL Codes: N22, H74, G01, K10.
Keywords: sovereign default, municipal bankruptcy, Great Depression, Arkansas highway bonds

Suggested citation: Ergungor, O. Emre, 2016. “Sovereign Default in the US,” Federal Reserve Bank of Cleveland Working Paper, no. 16-09

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