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How Governments Borrow: Partisan Politics, Constrained Institutions, and Sovereign Debt in Emerging Markets

Autor Ben Cormier
en Limba Engleză Hardback – 29 feb 2024
How Governments Borrow reveals how annual borrowing decisions are informed by domestic politics. The book traces the annual fiscal policymaking process in Emerging Markets (EM) to show how a government's partisan policy preferences are a primary determinant of annual external borrowing decisions and thus patterns of debt accumulation. That sovereign debt composition has partisan political roots provides insights for scholars in political science, international relations, economics, sociology, and public administration that work on sovereign debt.Sovereign debt composition enhances or limits the capacity of an EM government to contribute to social and economic development. Many EMs depend on foreign currency debt. How much external debt an EM government owes, the cost of that debt, the maturity of that debt, and the conditions attached to that debt all determine the political and economic opportunities and risks associated with a government's borrowings. EMs borrow from different sources each year, leading them to build different sovereign debt structures over time. Some prioritize cheap yet conditional official credit, which constrains policy autonomy but enhances debt sustainability. Others prioritize comparatively expensive bond markets, which enhances policy autonomy but brings more expensive repayment obligations on to national balance sheets. As countries accumulate debt, the borrowing choices they make come to have important effects on fiscal space, debt sustainability, and development.
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Specificații

ISBN-13: 9780198882732
ISBN-10: 0198882734
Pagini: 192
Ilustrații: 20 figures
Dimensiuni: 160 x 240 x 20 mm
Greutate: 0.44 kg
Editura: OUP OXFORD
Colecția OUP Oxford
Locul publicării:Oxford, United Kingdom

Recenzii

How Governments Borrow provides an illuminating journey into unexplored realms of sovereign debt in emerging markets. It brilliantly combines quantitative and qualitative evidence to unveil how governments strategically shape borrowing decisions, shifting the lens from the supply to the demand side. A must read for academics and practitioners alike, Cormier skillfully challenges conventional notions, providing a nuanced understanding of how political forces influence economic governance in the realm of sovereign debt.
One under-studied question at the center of this important book is why some countries borrow more from official creditors such as development banks and others borrow more from the private sector. Cormier shows that political incentives matter and that left leaning governments are less likely to borrow from official creditors even though official creditors offer cheaper and more stable finance with respect to private lenders. This is surprising because one would expect that left-leaning governments should be less likely to use market instruments. The explanation is that official lending comes with conditionality that is politically costly for a left-leaning government. This is an intriguing result and this book is a must read for both scholars and practitioners interested in the economics and politics of sovereign debt.
When emerging market governments need financing, where do they turn - and how do domestic politics and institutions constrain their choices? Cormier provides a rigorous account of the short- and long-term tradeoffs that governments face, particularly when they must appease working-class constituents. Theoretically concise, empirically sophisticated, and with rich detail from important and understudied cases in the global South, this book is an indispensable account of the changing landscape of sovereign finance in the world's most dynamic and volatile markets.
Sovereign borrowing is a central feature of modern states: taking on debt allows governments to finance their activities, while avoiding unpopular or difficult to implement taxation. The ways in which governments borrow, as well as the amounts they borrow, also affect countries' financial stability. How Governments Borrow draws attention to the domestic political determinants of sovereign finance. Its multi-method empirical approach allows scholars and policymakers to better understand the life cycle of sovereign debt, as well as debt's potential opportunities and risks.
How Governments Borrow changes our understanding of emerging-market debt in important ways, and makes a major contribution to IPE.
Cormier casts an interesting spotlight on the mechanism of international borrowing and its interaction with fiscal policy. The detailed discussion of the intricate constraints that act on the various countries' borrowing agencies is illuminating, and the point that domestic politics not only cannot be ignored, but is very much in the driver's seat, is important. As tempting as it may be to think of finance ministries staffed by Western-trained economists as independent institutions that can run the country's finances decoupled from political turmoil, the author convincingly shows that this is even further from the truth than that same image applied to the worlds' central banks.
The book is clear and compelling, with a wealth of evidence that highlights the fundamentally political nature of sovereign debt, explaining how political choices over fiscal policy shape borrowing and the composition of outstanding debt. Especially welcome is the careful attention to the bureaucratic processes and politics of debt issuance. Cormier has offered a straightforward but counterintuitive account of how politics explain emerging markets' engagement with international finance, paving the way for more research that takes seriously the preferences and agency of borrowing countries.

Notă biografică

Ben Cormier is a Lecturer and Chancellor's Fellow at the University of Strathclyde School of Government and Public Policy. He works on the international political economy of finance and development, interested in sovereign debt, financial markets, capital flows, aid flows, loan conditions, government transparency, and international organizations.