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Coalition Governments And Sovereign Debt Crises

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  • SEBASTIAN M. SAIEGH
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    Abstract

    This article examines the domestic politics of sovereign debt crises. I focus on two alternative mechanisms that aggregate the preferences of domestic actors over debt repayment: single-party versus multiparty coalition governments. I uncover a very strong empirical regularity using cross-national data from 48 developing countries between 1971 and 1997. Countries that are governed by a coalition of parties are less likely to reschedule their debts than those under single-party governments. The effect of multiparty coalitions on sovereign defaults is quantitatively large and roughly of the same order of magnitude as liquidity factors such as debt burden and debt service. These results are robust to numerous specifications and samples. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Economics & Politics.

    Volume (Year): 21 (2009)
    Issue (Month): 2 (07)
    Pages: 232-254

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    Handle: RePEc:bla:ecopol:v:21:y:2009:i:2:p:232-254

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    1. Cohen, Daniel & Sachs, Jeffrey, 1986. "Growth and external debt under risk of debt repudiation," European Economic Review, Elsevier, vol. 30(3), pages 529-560, June.
    2. Paolo Manasse & Nouriel Roubini, 2005. "'Rules of Thumb' for Sovereign Debt Crises," International Finance 0509003, EconWPA.
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    Cited by:
    1. Michael Tomz & Mark L. J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," NBER Working Papers 18855, National Bureau of Economic Research, Inc.
    2. Schaltegger, Christoph & Weder, Martin, 2013. "Fiscal Adjustments and the Probability of Sovereign Default," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79979, Verein für Socialpolitik / German Economic Association.
    3. Sergio Bejar & Bumba Mukherjee & Will Moore, 2011. "Time horizons matter: the hazard rate of coalition governments and the size of government," Economics of Governance, Springer, vol. 12(3), pages 201-235, September.
    4. Yu Wang, 2013. "Veto Players and Foreign Aid Inflows," Oxford Development Studies, Taylor & Francis Journals, vol. 41(3), pages 391-408, September.
    5. Eichler, Stefan & Hofmann, Michael, 2013. "Sovereign default risk and decentralization: Evidence for emerging markets," European Journal of Political Economy, Elsevier, vol. 32(C), pages 113-134.

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