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Friends for the benefits: The effects of political ties on sovereign borrowing conditions

Gene Ambrocio and Iftekhar Hasan ()

No 13/2019, Research Discussion Papers from Bank of Finland

Abstract: Do closer political ties with a global superpower improve sovereign borrowing conditions? We use data on voting at the United Nations General Assembly along with foreign aid flows to construct an index of political ties and find evidence that suggests closer political ties leads to both better sovereign credit ratings and lower yields on sovereign bonds. We use heads-of-state official visits and coalition forces troop contributions as exogenous instruments to further strengthen the findings.

JEL-codes: F35 F50 G24 H63 (search for similar items in EconPapers)
Date: 2019-07-22
New Economics Papers: this item is included in nep-pol
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