TY - JOUR
T1 - Contingent Advantage? Sovereign Borrowing, Democratic Institutions and Global Capital Cycles
AU - Ballard-Rosa, Cameron
AU - Mosley, Layna
AU - Wellhausen, Rachel L.
N1 - Funding Information:
We thank Robert Galantucci and Mitch Watkins for assistance in compiling bond issue data; Bailee Donahue for research on debt management practices; and Kelly Kennedy and Benjamin Roberts for assistance with credit rating and election data. We also thank Sarah Brooks, Raphael de Cunha, Joonseok Yang, participants at Princeton University’s International Relations Colloquium, the Columbia University International Relations Workshop, the Penn University International Relationships Workshop, the University of Wisconsin-Madison International Relations Colloquium, the University of Pittsburgh, the UNC International Relations Brown Bag, the Public Debt Management in the EU and Beyond workshop at the Center for European Studies at UNC, the 2016 American Political Science Association meeting and the 2017 International Political Economy Society meeting.
Publisher Copyright:
Copyright © Cambridge University Press 2019.
PY - 2021/1
Y1 - 2021/1
N2 - How do domestic and global factors shape governments' capacity to issue debt in primary capital markets? Consistent with the 'democratic advantage', we identify domestic institutional mechanisms, including executive constraints and policy transparency, that facilitate debt issuance rather than electoral events. Most importantly, we argue that the democratic advantage is contingent: investors' attention to domestic politics varies with conditions in global capital markets. When global financial liquidity is low, investors are risk-averse, and political risk constrains governments' capacity to borrow. But when global markets are flush, investors are risk-tolerant and less sensitive to political risk. We support our argument with new data on 245,000 government bond issues in primary capital markets - the point at which governments' costs of market access matter most - for 131 sovereign issuers (1990-2016). In doing so, we highlight the role of systemic factors, which are under-appreciated in much 'open economy politics' research, in determining access to capital markets.
AB - How do domestic and global factors shape governments' capacity to issue debt in primary capital markets? Consistent with the 'democratic advantage', we identify domestic institutional mechanisms, including executive constraints and policy transparency, that facilitate debt issuance rather than electoral events. Most importantly, we argue that the democratic advantage is contingent: investors' attention to domestic politics varies with conditions in global capital markets. When global financial liquidity is low, investors are risk-averse, and political risk constrains governments' capacity to borrow. But when global markets are flush, investors are risk-tolerant and less sensitive to political risk. We support our argument with new data on 245,000 government bond issues in primary capital markets - the point at which governments' costs of market access matter most - for 131 sovereign issuers (1990-2016). In doing so, we highlight the role of systemic factors, which are under-appreciated in much 'open economy politics' research, in determining access to capital markets.
KW - bond issues
KW - capital markets
KW - democratic advantage
KW - government debt
KW - political risk
UR - http://www.scopus.com/inward/record.url?scp=85076476649&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85076476649&partnerID=8YFLogxK
U2 - 10.1017/S0007123418000455
DO - 10.1017/S0007123418000455
M3 - Article
AN - SCOPUS:85076476649
SN - 0007-1234
VL - 51
SP - 353
EP - 373
JO - British Journal of Political Science
JF - British Journal of Political Science
IS - 1
ER -