Cronyism provides policymakers with marked incentives to repay sovereign debt. This takes place at the expense of the average citizen who bears both steep costs of debt repudiation and high costs of debt service, as clientelism increases both financial fragility and the debt burden. The paper...

This paper highlights the spread of bank panics across countries, as the public reassesses governments' propensity to bailouts. Policymakers decide whether to save collapsing banking systems by weighing social costs of crises against the costs associated with raising taxes to finance rescue...