European Review of Economic History

Research Article

Political regimes and sovereign credit risk in Europe, 1750–1913


a1 Department of Economics, IMT Lucca Institute for Advanced Studies, Piazza San Ponziano 6, Lucca, Italy, 55100,


This article uses a new panel data set to perform a statistical analysis of political regimes and sovereign credit risk in Europe from 1750 to 1913. Old Regime polities typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that centralized and/or limited regimes were associated with significant improvements in credit risk relative to fragmented and absolutist ones. Structural break tests also reveal close relationships between major turning points in yield series and political transformations.