This article examines why democracies sometimes renege on sovereign debt during crises.

* The Core Question: Why do some democracies default when others uphold their commitments?

* Political Economy Logic: The answer lies in the balance between domestic and international economic interests. Workers favor high creditor losses to offset austerity costs at home, while internationally focused groups prefer minimal losses for easier debt repayment.

* Electoral Systems Matter: Democratic defaults' cost implications depend on how votes are aggregated: candidate-centric systems (like PR) incentivize governments to prioritize the ease with which international creditors can organize collectively, potentially leading to fewer creditor protections. In contrast, assembly-based systems might create different political pressures.

* Empirical Evidence: Analyzing 53 debt restructurings between 1978 and 2012 reveals statistical support for this argument.