Political institutions and debt crises

Rijckeghem, Caroline Van; Weder, Beatrice

doi:10.1007/s11127-008-9364-0

Cited by 80 publications

(41 citation statements)

References 36 publications

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“…We further restrict our sample by excluding the time span between the first incidence and the resolution of a default since the duration of a debt restructuring process may well be influenced by economic considerations other than the decision to enter the default status in the first place (Van Rijckeghem and Weder, 2009). …”

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confidence: 99%

The effect of IMF lending on the probability of sovereign debt crises

Jorra¹

2012

Journal of International Money and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper explores empirically how the adoption of IMF programs affects sovereign risk over the medium term. We find that IMF programs significantly increase the probability of subsequent sovereign defaults by approximately 1.5 to 2 percentage points. These results cannot be attributed to endogeneity bias as they are supported by specifications that explain sovereign defaults and program participation simultaneously. Furthermore, IMF programs turn out to be especially detrimental to fiscal solvency when the Fund distributes its resources to countries whose economic fundamentals are already weak. Our evidence is therefore consistent with the hypothesis that debtor moral hazard is most likely to occur in these circumstances. Other explanations that point to the effects of debt dilution and the possibility of IMF triggered debt runs, however, are also possible. Terms of use: Documents inJournal of Economic Literature Classification Codes: F33, F34, C25, C35

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confidence: 99%

The effect of IMF lending on the probability of sovereign debt crises

Jorra¹

2012

Journal of International Money and Finance

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“…With respect to the form of government, Van Rijckeghem and Weder (2009) and Kohlscheen (2010) show that the probability of debt rescheduling is lower in parliamentary democracies than in non-parliamentary regimes. Both studies also examine default propensities conditional on whether or not government parties hold a majority of seats in the legislature and whether the majority status is achieved alone or through the formation of a multi-party coalition.…”

Section: Empirical Evidencementioning

confidence: 99%

Policy Differences Among Parliamentary and Presidential Systems

Saiegh

2019

The Oxford Handbook of Public Choice, Volume 2

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This chapter examines how the organization of power and authority affects policy outcomes. The focus is on: (1) statutory law; (2) public spending; and (3) policy reversals. The empirical evidence suggests that, compared to prime ministers, presidents enjoy lower levels of legislative success. Yet, deadlocks or stalemates are rare events, even in the case of single-party minority governments under presidential democracies. Regarding public spending, the results suggest that one should look at governments’ partisan composition rather than constitutional structures. Government spending over GDP is lower in countries with single-minority governments. This is a common situation under presidentialism. As such, the negative relationship between presidentialism and public spending previously documented in the literature might be spurious. Finally, in terms of the connection between constitutional structures and policy reversals, there is a concrete policy choice: sovereign debt repayment. The analysis reveals that parliamentary democracies are less likely to reschedule their sovereign debts than presidential regimes.

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“…10 In the default probability literature, both logit and probit models have been used to serve this purpose, as shown by Van Rijckeghem and Weder (2009). Following King and Zeng (2001), who study rare events using the logistic regression, and in order to include fixed effects as robustness checks, in this study it is implemented the logistic specification.…”

Section: Model Specificationmentioning

confidence: 99%

Determinants of Fiscal Distress in Italian Municipalities

Gregori

Marattin

2015

SSRN Journal

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How important is to place limits on specific categories of local public spending in order to prevent municipalities' defaults? In this paper we consider Italian municipalities from 2000 to 2012. We use a logit model to investigate which of the main budget indicators (debt repayments, current budget equilibrium, amount of residuals and personnel costs) is relatively more important in affecting the default probability. Our results suggest that a 10% rise in the share of loan repayment over total spending leads to an increase in default probability by 2.6% on average. These findings are robust to alternative model specifications and the inclusion of fixed effects, time dummies and macroeconomic control variables. Our analysis thus shows that Italian municipalities seem to be on the default path when they are incapable to fully internalThe authors would like to thank participants in the EUROFRAME conference "Balance sheets misalignments: effects and policy implications for the EU economies" (June 2016). We are grateful to

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Political institutions and debt crises

Abstract: Sovereign debt crises, Political institutions, Early warning systems, D27, F30, F34,

Cited by 80 publications

References 36 publications

The effect of IMF lending on the probability of sovereign debt crises

The effect of IMF lending on the probability of sovereign debt crises

Policy Differences Among Parliamentary and Presidential Systems

Determinants of Fiscal Distress in Italian Municipalities

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