Kohlscheen, Emanuel. (2010) Sovereign risk : constitutions rule. Oxford Economic Papers, Vol.62 (No.1). pp. 62-85. ISSN 0030-7653

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Abstract

This paper models the executives choice of whether to reschedule external debt as the outcome of an intra-governmental negotiation process. The key issue the paper tries to explain is the stark difference in default rates between the group of developing countries that have presidential forms of government and those that are parliamentary (6.0%/year vs 1.6%/year). This difference is present in spite of the fact that the latter group tends to have a somewhat higher turnover of the executive. The conditions under which parliamentary democracies will deliver lower probabilities of default than presidential countries are derived in a model with opportunistic politicians. Empirically, I find that middle-income democracies with parliamentary regimes, more checks on the executive, lower turnover in leadership and coalition governments show lower default propensities.

Item Type:	Journal Article
Subjects:	H Social Sciences > HJ Public Finance
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Debts, Public, Democracy -- Economic aspects, Debt relief, Economic policy
Journal or Publication Title:	Oxford Economic Papers
Publisher:	Oxford University Press
ISSN:	0030-7653
Date:	January 2010
Volume:	Vol.62
Number:	No.1
Number of Pages:	24
Page Range:	pp. 62-85
Identification Number:	10.1093/oep/gpp005
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC)
Version or Related Resource:	Kohlscheen, E. (2005). Sovereign risk: constitutions rule. [Coventry] : University of Warwick, Economics Department. (Warwick economic research papers, no.731). http://wrap.warwick.ac.uk/id/eprint/1464
Related URLs:	Related item in WRAP
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URI:	http://wrap.warwick.ac.uk/id/eprint/16793

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