Social Polarization, Social Institutions, and Country Creditworthiness

The literature argues that the presence of multiple veto players (government decisionmakers) with polarized interests increases the credibility of sovereign commitments, but reduces the ability of governments to adjust policies in the event of exog...

Full description

Bibliographic Details
Main Authors:	Keefer, Philip, Knack, Stephen
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABSOLUTE VALUE AGGREGATE INCOME AGRICULTURE ALTERNATIVE POLICIES ASSET INEQUALITY BUSINESS CYCLE CIVIL LIBERTIES COEFFICIENT ESTIMATES COLLECTIVE ACTION COMPETITIVENESS COUNTRY COVERAGE CRISES DEBT DEFICIT SPENDING DEMOCRACY DEMOCRATIC INSTITUTIONS DEPENDENT VARIABLE DEVELOPING COUNTRIES DISCOUNT RATES DISTRIBUTION OF INCOME ECONOMIC EXCHANGE ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC POLICY EMPIRICAL WORK ENDOGENOUS VARIABLES ENFORCEABILITY ETHNIC DIVISIONS ETHNIC FRACTIONALIZATION ETHNIC GROUP ETHNIC GROUPS ETHNIC HOMOGENEITY ETHNIC POLARIZATION EXOGENOUS CHANGES EXOGENOUS SHOCKS EXTERNAL SHOCKS FREEDOM HOUSE GDP GINI COEFFICIENT GOVERNMENT DECISION MAKING HIGH INFLATION INCOME INCOME GROUPS INCOME GROWTH INCOME INEQUALITY INCOME INEQUALITY DATA INCOME LEVEL INCOME PER CAPITA INCOME TAXATION INEQUALITY COEFFICIENT INEQUALITY DATA INEQUALITY MEASURES INEQUALITY OBSERVATIONS INEQUALITY VARIABLES INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL ENVIRONMENT INSTITUTIONAL VARIABLES INTEREST RATE INTEREST RATES INVESTMENT CLIMATE LAND INEQUALITY LAND OWNERSHIP LINGUISTIC FRACTIONALIZATION LINGUISTIC GROUP LINK BETWEEN INEQUALITY AND GROWTH LORENZ CURVE MEAN VALUE MEASUREMENT ERROR MEDIAN VOTER MEDIAN VOTERS MONETARY POLICY MORAL HAZARD NEGATIVE COEFFICIENT NEGATIVE EFFECT NEGATIVE RELATIONSHIP NET EFFECT OIL PARLIAMENT PER CAPITA INCOME POLARIZATION MEASURES POLICY DECISIONS POLICY MAKING POLICY RESEARCH POLITICAL CONDITIONS POLITICAL CONFLICT POLITICAL ECONOMY POLITICAL FREEDOMS POLITICAL INSTITUTIONS POLITICAL PARTIES POLITICAL SCIENCE POLITICAL SCIENCE LITERATURE POLITICAL SYSTEMS POLITICAL VIOLENCE POSITIVE EFFECT PRIME MINISTER PROPERTY RIGHTS REGRESSION ANALYSIS REVERSE CAUSATION SIGNIFICANT NEGATIVE SOCIAL CONFLICT SOCIAL POLARIZATION TERMS OF TRADE VETO POWER WEALTH POLITICAL INSTITUTIONS GOVERNMENT DECISION-MAKING CREDITWORTHINESS GOVERNMENT COMMITMENTS POLITICAL ENVIRONMENT ETHNIC CONFLICT SOCIAL BEHAVIOR SOCIAL CONFLICTS SOCIAL ISOLATION INCOME LEVELS SOCIOECONOMIC CONDITIONS WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2002/10/2054538/social-polarization-social-institutions-country-creditworthiness http://hdl.handle.net/10986/19227

Description
Summary:	The literature argues that the presence of multiple veto players (government decisionmakers) with polarized interests increases the credibility of sovereign commitments, but reduces the ability of governments to adjust policies in the event of exogenous shocks that jeopardize their ability to honor their commitments. In the case of sovereign lending, if the first effect prevails, countries would be regarded as more creditworthy; if the second, less. The authors address two issues. First, using measures of country creditworthiness, they ask whether the net effect of multiple veto players is positive or negative. Second, though, the authors go beyond the existing literature to argue that the net effect of multiple veto players depends on the nature of social polarization in a country. In particular, they argue that political competition is fundamentally different in countries exhibiting ethnic polarization than in countries polarized according to income or wealth. The evidence supports the prediction that multiple veto players matter more when countries are more ethnically polarized, but less when income inequality is greater.

Social Polarization, Social Institutions, and Country Creditworthiness

Similar Items