10 research outputs found

    Political Regimes and Sovereign Credit Risk in Europe, 1750-1913

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    This article uses a new panel data set to perform a statistical analysis of political regimes and sovereign credit risk in Europe from 1750 to 1913. Old Regime polities typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that centralized and?or limited regimes were associated with significant improvements in credit risk relative to fragmented and absolutist ones. Structural break tests also reveal close relationships between major turning points in yield series and political transformations

    Macroeconomic Ideas and Business Cycles: One Size Doesnnt Fit All

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    THE POLITICAL ECONOMY OF FISCAL PRUDENCE IN HISTORICAL PERSPECTIVE

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    This paper uses a new panel dataset to perform a statistical analysis of political regimes and financial rectitude over the long run. Old Regime polities in Europe typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that political transformations toward centralized and limited regimes led to significant improvements in fiscal prudence. Dynamic estimations and structural breaks tests reinforce these findings. The results suggest that good financial housekeeping is one mechanism through which political reforms reduce sovereign credit risk. Copyright 2009 Blackwell Publishing Ltd.
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