The Library
Transparency, political conflict, and debt
Tools
Pancrazi, Roberto and Prosperi, Lorenzo (2020) Transparency, political conflict, and debt. Journal of International Economics, 126 . 103331. doi:10.1016/j.jinteco.2020.103331 ISSN 0022-1996.
|
PDF
WRAP-Transparency-political-conflict-debt-Pancrazi-2020.pdf - Accepted Version - Requires a PDF viewer. Available under License Creative Commons Attribution Non-commercial No Derivatives 4.0. Download (934Kb) | Preview |
Official URL: http://dx.doi.org/10.1016/j.jinteco.2020.103331
Abstract
In this paper we argue that an important and not-yet analyzed determinant of the observed heterogeneity of government debt across countries is the interaction between political conflicts and transparency of institutions. In the empirical part of the paper we show that whereas these two variables, per-se, are not significant determinants of observed debt levels across countries, their interaction is a key factor to explain debt-levels heterogeneity. Specifically, political conflicts imply higher borrowing only in non-transparent economies. In the theoretical model we propose a rationale for this effect. When the incumbent has preferences over distribution of resources across different groups, in a transparent economy political uncertainty leads to precautionary savings. Nevertheless, assuming that in more non-transparent economies the probability of an incumbent to be re-elected is more strongly a function of current economic conditions, then political uncertainty leads to borrowing incentives. We structurally estimate the two frictions in our model (political conflict and lack of transparency) by using their macroeconomic implications. Then, we compare the estimated frictions with the proxies for political conflict and lack of transparency in the data and we find a significant relationship, which supports our theory.
Item Type: | Journal Article | ||||||||
---|---|---|---|---|---|---|---|---|---|
Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HJ Public Finance J Political Science > JC Political theory |
||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Debts, Public , Debts, Public -- Political aspects, Economic policy, Fiscal policy , Transparency in government | ||||||||
Journal or Publication Title: | Journal of International Economics | ||||||||
Publisher: | Elsevier BV | ||||||||
ISSN: | 0022-1996 | ||||||||
Official Date: | September 2020 | ||||||||
Dates: |
|
||||||||
Volume: | 126 | ||||||||
Article Number: | 103331 | ||||||||
DOI: | 10.1016/j.jinteco.2020.103331 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 9 April 2020 | ||||||||
Date of first compliant Open Access: | 18 October 2021 | ||||||||
Related URLs: |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year