Resource Windfalls and Emerging Market Sovereign Bond Spreads: The Role of Political Institutions

Rabah Arezki and Markus Brückner

No 2011-08, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: We examine the effect that revenue windfalls from international commodity price booms have on sovereign bond spreads using panel data for 36 emerging market economies during the period 1997-2007. Our main finding is that commodity price booms lead to a significant reduction in the sovereign bond spread in democracies, but to a significant increase in the spread in autocracies. To explain our finding we show that, consistent with the political economy literature on the resource curse, revenue windfalls from international commodity price booms significantly increased real per capita GDP growth in democracies, while in autocracies GDP per capita growth decreased.

Keywords: commodity price shocks; sovereign bond spread; political institutions (search for similar items in EconPapers)
JEL-codes: C33 D72 D73 D74 H21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Resource Windfalls and Emerging Market Sovereign Bond Spreads: The Role of Political Institutions (2012)
Working Paper: Resource Windfalls and Emerging Market Sovereign Bond Spreads: The Role of Political Institutions (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2011-08

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