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Parliamentary and semi-presidential advantages in the sovereign credit market: democratic institutional design and sovereign credibility

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  • Isa Camyar

    (St. Francis College)

Abstract

We propose that institutional differences in executive-legislative relations generate heterogeneity in the creditworthiness of democracies in the sovereign credit market. In particular, there is a credibility advantage for parliamentarism relative to presidentialism, because the former, with stronger parties, elongates policy-makers’ time horizons and lowers their discount rate, thereby enhancing their ability to signal the credibility of their commitment to debt repayment. Our Heckman selection analysis of democracies from 1990 to 2012 confirms the existence of parliamentary advantage in sovereign credibility, and it also reveals a semi-presidential advantage relative to presidentialism. Our study contributes to the recent stream of research that problematizes the democracy/autocracy dichotomy in the study of sovereign credibility.

Suggested Citation

  • Isa Camyar, 2019. "Parliamentary and semi-presidential advantages in the sovereign credit market: democratic institutional design and sovereign credibility," Constitutional Political Economy, Springer, vol. 30(4), pages 383-406, December.
    • Handle: RePEc:kap:copoec:v:30:y:2019:i:4:d:10.1007_s10602-019-09288-0
    DOI: 10.1007/s10602-019-09288-0
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    More about this item

    Keywords

    Sovereign credibility; Democracy types; Parliamentarism; Presidentialism; Semi-presidentialism;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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