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Revolving doors in government debt management

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  • Silano, Filippo

Abstract

Compiling a unique dataset describing the career trajectories of 634 former and in office public officials at debt management units (DMUs) across 26 OECD countries, this article assesses the revolving door phenomenon in government debt management. The analysis' purpose is twofold: (i) to estimate the professional link between bureaucrats and financial institutions developing the market for government securities (i.e. dealers), and (ii) to describe the potential causes and effects of the phenomenon. To this end, the study relies on sequence analysis to empirically examine the sample's career trajectories, and on case studies, surveys, and interviews to qualitatively assess the revolving door. The main finding is that 53% of in office public servants worked at the dealers, whereas 46% of former bureaucrats moved to the dealers after their office. In particular, the general management, other senior positions and traders are the roles mostly affected by the phenomenon. Apart from being expertise enhancing and fostering financial market's trust, the study shows that the revolving door's side effect could entail the risk of capture. Causes are the dominance of the industry's mindset over public finance, the DMU-dealer institutionalised quid pro quo relationship, and the presence of a 'black-box' in the DMU's governance. The paper shall trigger studies pondering regulatory interventions curbing the revolving door's downsides. Further, the dataset paves the way to research estimating the impact of employees' background on agency performance.

Suggested Citation

  • Silano, Filippo, 2022. "Revolving doors in government debt management," ILE Working Paper Series 61, University of Hamburg, Institute of Law and Economics.
    • Handle: RePEc:zbw:ilewps:61
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    File URL: https://www.econstor.eu/bitstream/10419/251898/1/ile-wp-2022-61.pdf
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    References listed on IDEAS

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    Cited by:

    1. van der Heide, Arjen, 2024. "Dealing government bonds: Trading infrastructures and infrastructural power in European markets for public debt," MPIfG Discussion Paper 24/2, Max Planck Institute for the Study of Societies.
    2. Silano, Filippo, 2023. "Agency costs in primary dealer systems," ILE Working Paper Series 69, University of Hamburg, Institute of Law and Economics.

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    More about this item

    Keywords

    revolving doors; public finance; government debt management; dealers; capture; financialisation;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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