THE ANATOMY OF SOVEREIGN DEBT CRISES - LESSONS FROM THE AMERICAN STATE DEFAULTS OF THE 1840S

in theory, sovereign states with taxing powers should not have to defa ult on their debts, but in practice they sometimes do default, In the context of the U.S, state defaults of the 1840s, the paper draws atten tion to a neglected factor in explanations of sovereign defaults, name ly, revenue structure, or the mix of revenue sources used to fund stat e expenditures, Constraints of revenue structure interacted with polit ical considerations and economic expectations to cause nine states to default on their debts in the early 1840s, We identify two cases of de fault: developed states that chose to default and less developed state s that had little choice but to default. (C) 1998 Elsevier Science B.V .