IMF Working Papers

Fragmented Politics and Public Debt

By Ernesto Crivelli, Sanjeev Gupta, Carlos Mulas-Granados, Carolina Correa-Caro

September 19, 2016

Download PDF

Preview Citation

Format: Chicago

Ernesto Crivelli, Sanjeev Gupta, Carlos Mulas-Granados, and Carolina Correa-Caro. Fragmented Politics and Public Debt, (USA: International Monetary Fund, 2016) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In this paper, we study the impact of fragmented politics on public debt—in particular, between two consecutive legislative elections. Using data for 92 advanced and developing countries during 1975-2015, we find a positive association between political fragmentation and public debt changes. Corruption magnifies the effects; with higher perceived corruption, political fragmentation has a bigger sway on debt increases. The influence of political fragmentation on debt dynamics is somewhat asymmetric, with larger and more significant effects during periods of debt reduction. Establishment of fiscal councils helps attenuate the negative impact of political fragmentation on public debt dynamics.

Subject: Asset and liability management, Corruption, Crime, Debt reduction, Debt sustainability analysis, External debt, Fiscal councils, Fiscal policy, Public debt

Keywords: Accumulation rate, Center, Common pool, Corruption, Debt accumulation, Debt creation, Debt episode, Debt increase, Debt issuance, Debt reduction, Debt sustainability analysis, Dummy variable, Fiscal councils, Fiscal policy, Government debt dynamics, Government term, Political fragmentation, Public debt, Veto player, Veto players, WP

Publication Details

  • Pages:

    31

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2016/190

  • Stock No:

    WPIEA2016190

  • ISBN:

    9781475537024

  • ISSN:

    1018-5941

You May Also Be Interested In...

Guidance Note On The Financing Assurances And Sovereign Arrears Policies And The Fund's Role In Debt Restructurings

November 18, 2024

Burkina Faso: Report on Government Finance Statistics Mission (March 18–29, 2024)

November 18, 2024

Islamic Republic of Mauritania: Technical Assistance Project on Public Debt Projections: Scoping Mission Report

November 15, 2024

Growth Convergence and Public Finances of India and its States

November 15, 2024