Democracy, capital flows, and odious debt

This paper relates democracy, public and private international capital flows, and odious debt. Democracy commits a ruler to pass borrowed funds on to the private sector which builds the country's international collateral, and the consequent rise in the credit ceiling is a Pareto-improvement within a range because the ruler can appropriate a smaller share of the rising loan. However, the ruler may still impose odious debt in the sense that the private sector prefers the country to borrow less. Under certain conditions, a fall in the world interest rate or a rise in productivity growth increases the optimal levels of democracy, borrowing, investment, and welfare. I offer suggestive evidence from a global panel.

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Year of publication:	2009
Authors:	Janus, Thorsten
Published in:	The Journal of International Trade & Economic Development. - Taylor & Francis Journals, ISSN 0963-8199. - Vol. 18.2009, 2, p. 207-234
Publisher:	Taylor & Francis Journals
Subject:	democracy \| capital flows \| odious debt \| globalization

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004966932