Sovereign green bonds typically appear only after corporate green bond issuance has accumulated—a sequence at odds with the policy consensus that sovereign borrowing anchors debt market development. I argue that the inversion reflects market building by global investment banks. The four banks that authored the Green Bond Principles in 2014 used early private corporate transactions to build the verification practices, pricing conventions, and investor networks needed for a functioning market, then served as lead managers when sovereigns entered, transferring accumulated expertise across the public–private divide. States entered a market whose institutional infrastructure they did not design. The Cox proportional hazards model shows that accumulated corporate issuance significantly accelerates sovereign entry, while government agency issuance delays it by substituting for direct sovereign participation. A bank-level triangulation shows that founding-bank presence at sovereign entry reflects green-bond-specific expertise transfer rather than general dominance in sovereign debt underwriting. The findings identify financial intermediaries as a distinct channel through which sustainable finance reaches sovereign borrowers and show how privately constructed market conditions shape the terms on which states engage with global climate finance.

Following pressure from investors, Congress passed the 1976 Foreign Sovereign Immunities Act (FSIA) to facilitate lawsuits by nonstate commercial actors against sovereign states in US courts. This legislation redefined sovereign debt as a commercial activity, seemingly favoring creditors. Yet case outcomes proved variable. While the FSIA established clear procedural guidelines, judicial discretion remained, raising questions about what factors influence outcomes. How deep is the effect of judges’ partisan leanings? To what extent does a left–right divide exist in this issue area? Although sovereign debt of other countries rarely sparks US political debate, I argue that partisan influence persists in these cases, particularly when defendants are democracies. Republican-nominated judges consistently apply the FSIA’s pro-creditor framework regardless of defendant characteristics, reflecting their party’s historical support for transnational commercial actors and contract enforcement. Democratic-nominated judges, however, exhibit conditional deference: when democracies demonstrate fiscal restraint before defaulting—signaling genuine economic distress—Democratic-nominated judges more readily defer to the sovereign defendant within the FSIA’s constraints. When democracies maintain high government consumption while defaulting, suggesting strategic choice rather than necessity, Democratic-nominated judges enforce more strictly. By contrast, both Democratic- and Republican-nominated judges converge on pro-creditor positions when adjudicating autocratic defaults because the absence of credible fiscal signals eliminates conditions for conditional deference. I test this argument with an original data set of sovereign debt litigation cases brought to the United States from 1977 to 2022.

This paper examines the impact of low-carbon transition risks on sovereign borrowing costs. Using two unbalanced panel datasets covering 125 countries from 1995 to 2019, we estimate extended models of the macroeconomic determinants of short- and long-term sovereign debt costs. We include key indicators capturing exposure to transition risks, such as fossil resource abundance, the carbon intensity of GDP, and the share of renewable energy in total energy consumption. Results show that fossil resource abundance and a higher renewable energy share are associated with lower borrowing costs, whereas greater carbon intensity raises sovereign debt costs. Financial markets therefore appear to reward fossil resource endowments while penalizing carbon-intensive uses of these resources. This reveals a contradictory signal: fossil resource wealth lowers the cost of public borrowing, as it is perceived as a form of implicit collateral, while the actual use of these resources increases borrowing costs, reflecting a carbon risk premium.

Sovereigns issue debt on both domestic and foreign markets and when they default, they default mostly selectively. We propose a theory to rationalize these observations. A government chooses the optimal combination of two debts to smooth consumption, which is subject to output shock and volatile tax distortions. In equilibrium, it mostly relies on domestic debt to smooth the tax wedge and on foreign debt to smooth the output shock. Issuing either debt is less costly than raising taxes, but it is subject to default risk due to the government’s limited commitment. A quantitative, calibrated model with two shocks and two debts replicates well debt-to-GDP ratios, default frequencies, cyclical properties of emerging economies and behavior of aggregates around default episodes.

Political economists usually study small states to understand the secrets behind their success. This article examines the reasons for their failure. Greece is the most obvious example of a small state that has not managed to navigate the global economic and financial crisis successfully. But Greece is hardly alone. Hungary, Iceland, Ireland, Latvia, and Portugal have also struggled in the crisis although they have little in common with Greece. Meanwhile, countries that share many Greek characteristics, such as Italy, managed to hold out much longer. This suggests that the explanation for small country failure is structural rather than country-specific. The implication is that all countries are potentially at risk.

Under what conditions do countries lose their status as the leading global financial center? Some scholars argue that such shifts follow shortly after transitions in the distribution of other key capabilities (e.g. GDP), while others argue that path dependence or other more bespoke capabilities might be able to sustain financial leadership long after decline in other capabilities. This paper aims to understand the causes of the Anglo-American financial transition. I argue that the ability to manage political risk for investors is critical to the position of countries as financial entrepôts. In the case of British financial leadership, I argue that Britain’s position as an entrepôt hinged on its power projection capability, which enabled Britain to limit political risk for investors in ways that other states could not replicate. The gradual loss of those capabilities, in turn, saw Britain eventually become overshadowed by the United States. I support my claims with a TERGM analysis of the interwar sovereign debt network.

This article questions the drivers behind the distribution of savings in different capital markets in Portugal between 1550 and 1800. A novel dataset of credit transactions, interest rates and debt service documents a shift in the lenders' investment behaviour. By 1712, one of the leading institutional creditors—the Misericórdias—had ceased to allocate funds to the sovereign debt market. Data reveal that this disinvestment was neither related to the poor performance of debt service nor to the lure of potentially higher returns on private credit. We argue that changes in the rationales for issuing debt justify the drop in the number of institutional investors in the public credit market, and this correlates with the heavy allocation of funds into private lending.

The Excessive Deficit Procedure (EDP) is a political mechanism that aims at ‘multilevel governance’ of state indebtedness in the European Union. As such, it has become the concern of research that asks how sovereignty becomes articulated in this process. This article approaches this question through the conceptualization of a modular notion of sovereignty elaborated through a discussion of work on the finance-security nexus. The article argues that existing accounts of the formation of sovereign power in relation to state debt can be combined into a notion of modular sovereignty when seen through the prism of critiques of contractualism that take issue with liberal notions of state sovereignty and credit security. This way, the indebted state becomes visible as the referent object of multiple, and potentially contradictory, invocations of sovereignty as exercised in the EDP. First, it figures as the seat of budget sovereignty, holding its social substrate liable for its debts while ignoring inequalities in that substrate. Second, it is appealed to, within a biopolitical rationality, as the sovereign guarantor of the financial wellbeing of its population. Third, it is seen as the executor of financial wisdom that is mobilized in struggles between different levels of financial governance in the EDP.

How was Romania able to borrow cheaply on the international capital markets before World War I? We explore this within the context of its three southeast European neighbours, Bulgaria, Greece and Serbia, using a novel dataset of monthly bond prices from the Berlin and London stock exchanges. A comparison of country characteristics and panel data analysis suggests that Romania was able to borrow under more favourable conditions due to its abundant natural resources and desirable exports.