Quid pro quo? Political ties and sovereign borrowing

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Title: Quid pro quo? Political ties and sovereign borrowing
Author: Ambrocio, Gene ; Hasan, Iftekhar
Series: Journal of International Economics
Series volume: 133
Series number: November
Year of publication: 2021
Publication date: 14.8.2021
Keywords: politiikka; poliittiset yhteydet; kansainväliset suhteet; Yhdistyneet kansakunnat; Yhdysvallat; valtionvelka; kehitysyhteistyö
JEL: F34; F35; F50; G24; H63
Other keywords: Sovereign debt; International relations; Foreign aid; United Nations
Abstract: Do stronger 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 stronger political ties with the US is associated with both better sovereign credit ratings and lower yields on sovereign bonds especially among lower income countries. We use official heads-of-state visits to the White House and coalition forces troop contributions as additional measures of the strength of political ties to further reinforce our findings.


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