"Sovereign debt default is an often catastrophic form of economic crisis that can affect the entire global economy. The IMF predicts that, in the coming years, over 50 countries are at risk of default. Yet, we understand little about the political determinants of this decision to renege on...

This paper considers an economy in which policymakers with different preferences concerning fiscal policy alternate in office as a result of democratic elections. It is shown that in this situation government debt becomes a strategic variable used by each policymaker to influence the choices of...