Contingent Advantage? Sovereign Borrowing, Democratic Institutions and Global Capital Cycles

Cameron Ballard-Rosa, Layna Mosley, Rachel L. Wellhausen

Research output: Contribution to journalArticlepeer-review

34 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)353-373
Number of pages21
JournalBritish Journal of Political Science
Issue number1
StatePublished - Jan 2021
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Political Science and International Relations


  • bond issues
  • capital markets
  • democratic advantage
  • government debt
  • political risk


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