Default and political survival in networked democracies since 1870

Jeffrey M Chwieroth, Cohen R. Simpson and Andrew Walter

Many fear that a Greek default would lead voters elsewhere in Europe to favour default over austerity. This column argues that it is more likely to have the opposite effect. Network interdependencies among countries affect the domestic politics of default because defaults are both rare and vivid. Foreign default increases the propensity for voters to punish their governments for failing to repay external private creditors.