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Does public debt secure social peace? A diversionary theory of public debt management

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Listed:
  • Maxime Menuet

    (Univ. Orléans, LEO
    IHEDN)

  • Patrick Villieu

    (Univ. Orléans, LEO)

  • Marcel Voia

    (Univ. Orléans, LEO
    Carleton University)

Abstract

This study analyzes the strategic use of public debt. Contrary to the classical view that politicians can use public debt to tie the hands of their successors, we show that an incumbent government can take advantage of having tied its own hands before the election with the help of public debt. By doing this, it reduces the basis for future social conflicts and benefits from social peace during its term, which may enhance its chances of being re-elected. In addition, in the case of foreign or external public debt, the incumbent can strategically divert future social conflicts toward a common enemy (foreign creditors). Thus, by increasing public debt before the election, the incumbent can strengthen social cohesion during his/her mandate, both by reducing the basis of internal conflicts and by diverting citizens from internal toward external rent-seeking activities.

Suggested Citation

  • Maxime Menuet & Patrick Villieu & Marcel Voia, 2021. "Does public debt secure social peace? A diversionary theory of public debt management," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 475-501, October.
    • Handle: RePEc:spr:sochwe:v:57:y:2021:i:3:d:10.1007_s00355-021-01332-z
    DOI: 10.1007/s00355-021-01332-z
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    Cited by:

    1. Maxime Menuet, 2024. "Natural Resources, Civil Conflicts, and Economic Growth," GREDEG Working Papers 2024-05, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Maxime Menuet & Hugo Oriola & Patrick Villieu, 2024. "Do conservative central bankers weaken the chances of conservative politicians?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 62(4), pages 681-738, June.

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