Parliamentary and semi-presidential advantages in the sovereign credit market: democratic institutional design and sovereign credibility

Isa Camyar ()
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Isa Camyar: St. Francis College

Constitutional Political Economy, 2019, vol. 30, issue 4, No 2, 383-406

Abstract: Abstract We propose that institutional differences in executive-legislative relations generate heterogeneity in the creditworthiness of democracies in the sovereign credit market. In particular, there is a credibility advantage for parliamentarism relative to presidentialism, because the former, with stronger parties, elongates policy-makers’ time horizons and lowers their discount rate, thereby enhancing their ability to signal the credibility of their commitment to debt repayment. Our Heckman selection analysis of democracies from 1990 to 2012 confirms the existence of parliamentary advantage in sovereign credibility, and it also reveals a semi-presidential advantage relative to presidentialism. Our study contributes to the recent stream of research that problematizes the democracy/autocracy dichotomy in the study of sovereign credibility.

Keywords: Sovereign credibility; Democracy types; Parliamentarism; Presidentialism; Semi-presidentialism (search for similar items in EconPapers)
JEL-codes: D02 F34 P48 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s10602-019-09288-0

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