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ID:
191014
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| Summary/Abstract |
Since the 1990s, credit rating agencies have played a prominent financial role in developing countries, rating their sovereign bonds and determining capital costs. Over much the same years, domestic terrorism has expanded, increasing market disruptions in countries. Despite the heightened costs related to rebel attacks, few studies investigate the impact of domestic terrorism on bond ratings. Using a sample of seventy-one developing countries between 1996 and 2018, we find that domestic terrorist incidents result in sovereign bond downgrades for countries that receive ratings. Further, when we disaggregate terrorist events by target type, we observe that attacks directed at the government, military and police, business, non-governmental organizations, and private citizens/property have a larger effect than other terrorist incidents. We argue that specific domestic terrorist attacks increase economic instability, leading to capital flight, and a shifting of resources from productive economic sectors to counterterrorism. The resulting economic changes weaken a country’s economy and increase debt nonpayment risk.
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| 2 |
ID:
176567
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| Summary/Abstract |
The term “ethnic outbidding” refers to an auction-like process where ethnically-based political parties adopt extreme ideological positions as a means of distancing themselves from rival parties. While a lot of research references ethnic outbidding, very little empirical analysis actually assesses the ability of the outbidding model to explain the actions of ethnic political parties. More generally, existing research on outbidding fails to account for ideological variation among ethnic parties. In this article, we review the research on ethnic party tactics and propose a strategy for implementing ideological data into future ethnic politics research. Employing local-level voting data for Romania and Slovakia, we show that ideological variables have a significant degree of explanatory power. This finding implies that it is only by treating ethnic party ideologies and tactics as exogenous independent variables that we can properly assess the validity of the outbidding model and the existence of outbidding.
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