Costa, Leonor FreireMiranda, Susana Münch2024-01-292024-01-292023Costa, Leonor Freire and Susana Münch Miranda .(2023). “Reputational recovery under political instability: Public debt in Portugal, 1641–83”. The Economic History Review, Vol. 76, Issue 3: pp. 871–891. (Search PDF in 2024)http://hdl.handle.net/10400.5/29980This article examines the reputation recovery of Portugal’s public debt during the war of liberation against the former Habsburg ruler. Using novel datasets on long- and short-term debt and nominal interest rates, this study provides evidence that the sovereign borrower used debt credibility to build a pact of regime in a revolutionary context with implications for financing the war. The Portuguese kings followed an implicit budget balance rule as a reputational scheme, which made Portugal an exceptional case of military success with a low debt-to-GDP ratio and low interest rates. These conclusions contribute to the literature in various attributes of war finance, debt management, and state-making by showing that default avoidance could be as important to military success as fiscal capacity.engAbsolutist RegimeCredible CommitmentDebt SustainabilityInterest RatesPerpetuitiesSelf-Enforced Constraintsjournal articleDOI: 10.1111/ehr.132171468-0289