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  3. 28/2017

Politicians share responsibility for the risk of their state defaulting

Investors assume higher risks of default when a country is politically unstable or governed by a party at the left or right end of the political spectrum. However, according to findings obtained by Stefan Eichler from the Halle Institute for Economic Research (IWH), the more democratic the country is and the more it is integrated into the global economy, the lower is the impact that such political factors have.

Authors Stefan Eichler

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Keywords

default risk balance of payments
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