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

We examine the effect that revenue windfalls from international commodity price booms have on sovereign bond spreads using panel data for 38 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.

Bibliographic Details

Main Authors:	Arezki, Rabah, Brückner, Markus
Format:	Journal Article biblioteca
Language:	en_US
Published:	World Bank 2012-01-18
Subjects:	Bond, bonds, commodities, commodity, commodity export, commodity exports, commodity price, commodity prices, debt, democracies, economic development, Emerging Market, emerging market economies, Emerging Markets, financial support, foreign currency, natural resource, natural resources, output, political economy,
Online Access:	http://hdl.handle.net/10986/15310
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