Preventive war and sovereign debt

2021 ◽  
pp. 073889422110249
Author(s):  
Colin Krainin ◽  
Kristopher W Ramsay ◽  
Bella Wang ◽  
Joseph J Ruggiero
Keyword(s):  
Interest Rates ◽  
Sovereign Debt ◽  
Bond Market ◽  
Major Power ◽  
Preventive War ◽  
Power Shift ◽  
Commitment Problem ◽  
Cost Of War ◽  
The Cost ◽  
Bargaining Model Of War

The preventive motive for war arises because states cannot commit to limit the use of their growing power. This commitment problem can lead to war when there are not enough resources available to compensate the declining state for their expected losses. In this article, we show how capital markets affect preventive war incentives by introducing a profit-maximizing bond market to the canonical bargaining model of war. We find that the nature of the power shift and fundamentals of the market for debt interact to determine when a preventive motive is more likely to lead to war. Two main results show that (1) less probable but more extreme power shifts are most dangerous and (2) unlike the direct effect of interest rates on the cost of war, higher interest on sovereign debt makes war more likely. We present evidence for the latter effect by extending Lemke’s (2003) study of preventive war for major-power dyads between 1816 and 1992.

Institutional Reforms, Financial Development and Sovereign Debt: Britain 1690–1790

2006 ◽  
Vol 66 (4) ◽  
pp. 906-935 ◽  
Author(s):  
Nathan Sussman ◽  
Yishay Yafeh
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
Financial Development ◽  
Sovereign Debt ◽  
Glorious Revolution ◽  
Institutional Reforms ◽  
Short Run ◽  
Per Capita ◽  
The Glorious Revolution ◽  
The Cost

We revisit the evidence on the relations between institutions, the cost of government debt, and financial development in Britain (1690–1790) and find that interest rates remained high and volatile for four decades after the Glorious Revolution, partly due to wars and instability; British interest rates co-moved with those in Holland; Debt per capita remained lower in Britain than in Holland until around 1780; and Britain did not borrow at lower rates than European countries with more limited protection of property rights. We conclude that, in the short run, institutional reforms are not rewarded by financial markets.

Fiscal transparency and the cost of sovereign debt

2016 ◽  
Vol 83 (1) ◽  
pp. 106-128 ◽  
Author(s):  
Francisco Bastida ◽  
María-Dolores Guillamón ◽  
Bernardino Benito
Keyword(s):  
Interest Rates ◽  
Public Management ◽  
Sovereign Debt ◽  
Credit Rating ◽  
Credit Ratings ◽  
Political Trust ◽  
Cost Of Debt ◽  
Budget Deficits ◽  
Fiscal Transparency ◽  
The Cost

This article analyses the factors that seem to play an important role in determining the cost of sovereign debt. Specifically, we evaluate to what extent transparency, the level of corruption, citizens’ trust in politicians and credit ratings affect interest rates. For that purpose, we create a transparency index matching the 2007 Organisation for Economic Co-operation and Development/World Bank Budgeting Database items with the Organisation for Economic Co-operation and Development Best Practices for Budget Transparency sections. We also check our assumptions with the International Budget Partnership’s Open Budget Index and with a non-linear transformation of our index. Furthermore, we use several control variables for a sample of 103 countries in the year 2008. Our results show that better fiscal transparency, political trust and credit ratings are connected with a lower cost of sovereign debt. Finally, as expected, higher corruption, budget deficits, current account deficits and unemployment make sovereign interest rates increase. Points for practitioners The key implications for professionals working in public management and administration are twofold. First, despite the criticism raised by credit ratings, it is clear that poorer ratings are connected with higher financing costs for governments. Therefore, governments should enhance those indicators that impact the credit rating of their sovereign debt. Second, governments should seek to be more transparent, since transparency reduces uncertainty about the degree of cheating, improves decision-making and therefore decreases the cost of debt. Transparency reduces information asymmetries between governments and financial markets, which, in turn, diminishes the spread requested by investors.

scholarly journals The deadweight cost of war: An illustrative CGE

2011 ◽  
Vol 6 (2) ◽  
Author(s):  
John Gilbert ◽  
Krit Linananda ◽  
Tanigawa Takahiko ◽  
Edward Tower ◽  
Alongkorn Tuncharoenlarp
Keyword(s):  
General Equilibrium ◽  
Interest Rates ◽  
Equilibrium Model ◽  
Computable General Equilibrium ◽  
Full Employment ◽  
Computable General Equilibrium Model ◽  
General Equilibrium Model ◽  
Small Scale ◽  
Cost Of War ◽  
The Cost

War is costly both because of the resources used up and because of the inefficiency introduced by the higher taxes necessary to finance them. War has been justified by its ability to help an economy achieve full employment. Robert Barro argues that war increases employment because folks work harder to smooth consumption and take advantage of the higher interest rates caused by the scarcity that accompanies war. In his view, it does not reflect putting previously wasted resources to work. This article describes the simulations of a small-scale intertemporal computable general equilibrium model. It illustrates that the cost of war depends on how it is financed, and that the increase in employment that it generates may be explained by the logic that Barro offers. Our model can be loaded into GAMS, a program which is available free of charge online, so readers can themselves simulate variations of the model.

Preventive War as a Result of Long-Term Shifts in Power

2015 ◽  
Vol 5 (1) ◽  
pp. 103-121 ◽  
Author(s):  
Colin Krainin
Keyword(s):  
Complete Information ◽  
Transition Theory ◽  
Sufficient Condition ◽  
Power Transition Theory ◽  
Preventive War ◽  
Power Shift ◽  
Commitment Problem ◽  
Distribution Of Power ◽  
Do So

This paper analyzes a complete information model of preventive war where shifts in the distribution of power play out over an arbitrary number of time periods. This analysis leads to a sufficient condition that implies war under a broader set of conditions than previously shown in the literature. This sufficient condition leads to two substantive implications: (1) preventive war can be caused by relatively slow, but persistent shifts in the distribution of power; and (2) a power shift that causes war may do so only after some delay. These insights serve to connect the long-term shifts emphasized in Power Transition Theory with the commitment problem explanation for preventive war analyzed in bargaining models of war.

The Cost of War

2020 ◽  
Author(s):  
Stephen Garton
Keyword(s):  
Cost Of War ◽  
The Cost

Funding Pensions in Scotland: Would Independence Matter?

2014 ◽  
Vol 227 ◽  
pp. R21-R31
Author(s):  
David Bell ◽  
David Comerford ◽  
David Eiser
Keyword(s):  
Public Debt ◽  
Government Debt ◽  
Bond Market ◽  
Liquidity Premium ◽  
Mortality Experience ◽  
Mortality Risks ◽  
Economic Issues ◽  
Scottish Government ◽  
The Uk ◽  
The Cost

Economic issues will be key determinants of the outcome of the Scottish referendum on independence. Pensions are a key element of the economic case for or against independence. The costs of funding pensions in an independent Scotland would be influenced by mortality risks, the costs of borrowing and the segmentation of costs and risks (i.e. pricing to Scotland's experience rather than pooled across UK experience). We compare the overall costs of providing pensions in an independent Scotland against the resources that are available to cover these costs. Scotland has worse mortality experience than the UK as a whole, and Scottish government debt is likely to attract a liquidity premium relative to UK government debt. An independent Scottish government would have to create a bond market for public debt. The liquidity premium would make pensions cheaper to buy, but taxpayers or the consumers of public services would have to pay the cost.

scholarly journals Analysis of Effects of Service Quality and Loyalty on Interest Rates of Basketball Athletes in Sahabat Basketball Club Yogyakarta

2020 ◽  
Vol 11 (2) ◽  
pp. 151-160
Author(s):  
Kukuh Hardopo Putro ◽  
Mohd Salleh Aman ◽  
Keyword(s):  
Interest Rates ◽  
Random Sampling ◽  
External Factors ◽  
Major Influence ◽  
Qualitative And Quantitative ◽  
Analysis Techniques ◽  
Using Data ◽  
Internal And External Factors ◽  
The Cost ◽  
Customer Trust

AbstractIn business, especially basketball experience an increased very rapidly, both in terms of quality and quantity in Yogyakarta. Customer as the facilities and services the user pays the cost, much influenced by several internal and external factors. These factors have a major influence on the process of the customer to pay a fee to join and dues in Basketball Clubs. This type of research is descriptive with mixed qualitative and quantitative approach, population in this study is the Athlete Club Basketball “Sahabat” of Yogyakarta, with the number of 20 people, the study sample was determined by random sampling. The technique of collecting data using questionnaires. SPSS.21 using data analysis techniques. While looking at the level of loyalty of respondents to the basketball club Yogyakarta “Sahabat”, 13 of 20 respondents said well (65%) and 7 respondents (35%) had middle loyalty. So from this study showed that customer trust is strongly influenced by the good facilities, appropriate tariffs, staff were nice, the service was very good, and therefore in this study obtained very significant results to customer satisfaction or athletes in the Club Basketball “Sahabat” of Yogyakarta.

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