Ethnic politics and sovereign credit risk

How does domestic politics affect sovereign credit risk? To date, scholars have largely focused on how economic interests along class-cleavages influence sovereign default risk and borrowing costs. Ethnic dynamics are another important political factor that explains governments’ creditworthiness, yet are understudied. We investigate how ethnic politics shape governments’ credit access and argue that the fiscal incentives generated by ethnic coalitions influence credit risk differently than those created by class cleavages. Because ethnic coalitions are usually smaller than class coalitions, left governments with ethnic support can commit to lower spending and receive more favorable risk assessments. Right governments that rely on ethnic support, however, will have greater spending demands because of their need to satisfy ethnic groups. We test our argument using a new indicator of government ethnic support and four indicators of sovereign credit risk. We find that, in emerging markets, the borrowing costs of right governments increase as they become more dependent on ethnic groups for political support. Our findings suggest that financial markets are attuned to multiple dimensions of domestic politics and demonstrate that ethnic divisions can have strong implications for governments’ access to credit

Professionalization and Effectiveness in State Legislatures

The 84th regular session of the Texas Legislature will convene in Austin on January 13, 2015, and is scheduled to run through June 1, 2015. Students in this capstone will spend the fall semester learning about state legislatures in general and the Texas Legislature in particular. During the spring semester, students will relocate to Austin to work for state legislators, legislative committees, or legislative agencies. The specific legislators and committees have not been finalized as yet, but students can expect to have opportunities to use their analytic skills. Even though students will have different work assignments during the spring semester, we will come together as a capstone class regularly. Students will produce a capstone report that builds on their fall semester study and their spring semester work experiences. The actual substance of the report will be determined by the capstone class; but it could address session milestones (significant legislation adopted/defeated/deferred); noteworthy shifts in policy (e.g., redistricting in the 82nd session, the rainy day fund in the 83rd session); or, possibly, a comparison of Texas legislative actions to those in other states as well as the identification and discussion of issues on the horizon for the 85th session

Replication data for: The Physical Consequences of Fiscal Flexibility: Sovereign Credit and Physical Integrity Rights

Replication data and supplementary appendix for "The Physical Consequences of Fiscal Flexibility:Sovereign Credit and Physical Integrity Rights

Replication Data for: Arms versus Democratic Allies

Include Stata data fle and do file for replication of they analysis in the manuscript and supplementary appendix

Tightening the Belt: Sovereign Debt and Alliance Formation

International relations scholars have previously argued that states facing budget constraints will join alliances to free resources for domestic spending. In this paper, we focus on the primary mechanism by which leaders have relaxed this constraint: sovereign borrowing. Sovereign debt enables states to maintain stable tax rates while increasing expenditures to confront budgetary emergencies. Affordable access to credit, then, serves as both a source of power and an important buffer between security and the political consequences of fiscal policy. States that lack the confidence of investors must make tough choices between continued security and their electoral fortunes. We suggest that as governments lack access to affordable credit, they will substitute military capacity with alliance formation. Alliances provide a means for leaders to offset the loss of flexibility from diminished access to credit without disturbing the domestic political economy. Using previous models of alliance formation as a guide, our empirical evidence indicates that states that have a hard time borrowing are more likely to form an alliance than those states with affordable access to credit markets

Replication Data for: Economics, Security, and Individual-level Preferences for Trade Agreements

Empirical research on the determinants of individual-level support for trade liberalization has focused almost entirely on the economic effects of trade. Yet international relations scholarship has long recognized that commerce also has a variety of security implications. This paper explores if and when security considerations influence individual attitudes towards trade. In this study, we ask two questions: First, to what extent do expectations about the security implications of trade affect individual-level attitudes toward trade agreements? Second, does the introduction of security concerns into the discussion of trade agreements influence how heavily individuals weigh their economic costs and benefits? We employ an original experiment embedded in a conjoint survey to investigate the relative impact of a variety of economic and security considerations on respondents’ support for trade. Our findings suggest that security information matters and undermines the appeal of some, though not all, economic arguments for trade liberalization among our respondents

Tightening the Belt: Sovereign Debt and Alliance Formation

International relations scholars have previously argued that states facing budget constraints will join alliances to free resources for domestic spending. In this paper, we focus on the primary mechanism by which leaders have relaxed this constraint: sovereign borrowing. Sovereign debt enables states to maintain stable tax rates while increasing expenditures to confront budgetary emergencies. Affordable access to credit, then, serves as both a source of power and an important buffer between security and the political consequences of fiscal policy. States that lack the confidence of investors must make tough choices between continued security and their electoral fortunes. We suggest that as governments lack access to affordable credit, they will substitute military capacity with alliance formation. Alliances provide a means for leaders to offset the loss of flexibility from diminished access to credit without disturbing the domestic political economy. Using previous models of alliance formation as a guide, our empirical evidence indicates that states that have a hard time borrowing are more likely to form an alliance than those states with affordable access to credit markets

Sovereign Credit and the Fate of Leaders: Reassessing the “Democratic Advantage”

In this article, we contend that the “democratic advantage” literature (i) exaggerates the potential political backlash from credit downgrades in democracies; and (ii) overlooks the importance of sovereign credit to nondemocratic leaders. We argue that nondemocratic regimes receive a higher marginal political benefit from credit compared to democratic regimes. Consequently, changes in credit prices or credit access affect nondemocratic leaders' tenure more than democratic leaders' tenure. To test this argument, we provide the first statistical examination of the electoral punishment mechanism of the “democratic advantage.” Our duration analysis shows that credit downgrades increase nondemocratic leaders' vulnerability more than that of their democratic peers. Our research reinforces the growing concerns about the conventional views about regime type, domestic constraints, and leaders' preferences toward sovereign credit and other political processes

supplementary_materials_online_supp – Supplemental material for Transparency, Risk, and FDI

<p>Supplemental material, supplementary_materials_online_supp for Transparency, Risk, and FDI by Colin M. Barry and Matthew DiGiuseppe in Political Research Quarterly</p

Replication data for: Good for the Money: International Finance, State Capacity, and Internal Armed Conflict

Previous research indicates that a lack of state capacity is a key determinant of internal armed conflict. Scholars identify several internal dimensions of state capacity, but have yet to explore how international finance influences state resources. This is surprising because sovereign lending has increased dramatically in recent decades and plays an increasing role in the functioning of developed and developing governments. In this article, we explore this rela- tionship between a state'™s integration into global credit markets and its subsequent capacity to promote domestic stability. We argue that international capital increases a state's ability to respond to internal opposition because states with favorable credit terms can expand their resource base beyond domestic constraints to deter, accommodate, or repress opposition while maintaining a level provision of resources to their political base. We examine the influence that both capital access and credit terms have on the risk of civil conflict in 141 countries from 1981 to 2007. Our empirical results indicate that states with affordable credit access are indeed less likely to experience civil conflict