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Where states and markets meet: the financialisation of sovereign debt management

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  • Florian Fastenrath
  • Michael Schwan
  • Christine Trampusch

Abstract

Financial markets play an indispensable role in the management of sovereign debt, that is, the mechanics of how and from whom governments borrow. This paper suggests a novel, two-dimensional concept to measure the financialisation of sovereign debt management (SDM): (1) the reliance on financial markets as a governance mechanism and (2) the adoption of a sense-making framework grounded in financial economics. We split this concept into nine indicators and apply it to data from 23 OECD countries between 1980 and 2010. Our analysis illustrates the predominant commonalities across countries, but at the same time, country-specific differences. We interpret them as two sides of the same coin in the light of an overarching trend of increasing alignment to financial markets. This article is not only one of the first cross-national as well as longitudinal studies of the dynamics in SDM; it also reveals that the relationship between finance and governments in the SDM is by no means one-sided.

Suggested Citation

  • Florian Fastenrath & Michael Schwan & Christine Trampusch, 2017. "Where states and markets meet: the financialisation of sovereign debt management," New Political Economy, Taylor & Francis Journals, vol. 22(3), pages 273-293, May.
  • Handle: RePEc:taf:cnpexx:v:22:y:2017:i:3:p:273-293
    DOI: 10.1080/13563467.2017.1232708
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    File URL: http://hdl.handle.net/10.1080/13563467.2017.1232708
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    References listed on IDEAS

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    1. Christian Marazzi, 2011. "The Violence of Financial Capitalism," MIT Press Books, The MIT Press, edition 2, volume 1, number 1584351020, May.
    2. Oecd, 2005. "Overview of Advances in Risk Management of Government Debt," Financial Market Trends, OECD Publishing, vol. 2005(1), pages 117-134.
    3. Abdul Khan & Stephen Mayes, 2009. "Transition to Accrual Accounting," IMF Technical Notes and Manuals 09/02, International Monetary Fund.
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