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Quid pro quo? Political ties and sovereign borrowing

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  • Ambrocio, Gene
  • Hasan, Iftekhar

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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  • Ambrocio, Gene & Hasan, Iftekhar, 2021. "Quid pro quo? Political ties and sovereign borrowing," Journal of International Economics, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:inecon:v:133:y:2021:i:c:s0022199621001033
    DOI: 10.1016/j.jinteco.2021.103523
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    Cited by:

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    7. Hua Zhou & Lun Yang & Yijia Wang & Jiachen Fan, 2025. "Bilateral political ties and the stability of services exports," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(1), pages 85-113, January.

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    More about this item

    Keywords

    Sovereign debt; International relations; Foreign aid; United Nations;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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