Keefer, PhilipKnack, Stephen2014-08-012014-08-012002-10https://hdl.handle.net/10986/19227The literature argues that the presence of multiple veto players (government decisionmakers) with polarized interests increases the credibility of sovereign commitments, but reduces the ability of governments to adjust policies in the event of exogenous shocks that jeopardize their ability to honor their commitments. In the case of sovereign lending, if the first effect prevails, countries would be regarded as more creditworthy; if the second, less. The authors address two issues. First, using measures of country creditworthiness, they ask whether the net effect of multiple veto players is positive or negative. Second, though, the authors go beyond the existing literature to argue that the net effect of multiple veto players depends on the nature of social polarization in a country. In particular, they argue that political competition is fundamentally different in countries exhibiting ethnic polarization than in countries polarized according to income or wealth. The evidence supports the prediction that multiple veto players matter more when countries are more ethnically polarized, but less when income inequality is greater.en-USCC BY 3.0 IGOABSOLUTE VALUEAGGREGATE INCOMEAGRICULTUREALTERNATIVE POLICIESASSET INEQUALITYBUSINESS CYCLECIVIL LIBERTIESCOEFFICIENT ESTIMATESCOLLECTIVE ACTIONCOMPETITIVENESSCOUNTRY COVERAGECRISESDEBTDEFICIT SPENDINGDEMOCRACYDEMOCRATIC INSTITUTIONSDEPENDENT VARIABLEDEVELOPING COUNTRIESDISCOUNT RATESDISTRIBUTION OF INCOMEECONOMIC EXCHANGEECONOMIC GROWTHECONOMIC OUTCOMESECONOMIC PERFORMANCEECONOMIC POLICIESECONOMIC POLICYEMPIRICAL WORKENDOGENOUS VARIABLESENFORCEABILITYETHNIC DIVISIONSETHNIC FRACTIONALIZATIONETHNIC GROUPETHNIC GROUPSETHNIC HOMOGENEITYETHNIC POLARIZATIONEXOGENOUS CHANGESEXOGENOUS SHOCKSEXTERNAL SHOCKSFREEDOM HOUSEGDPGINI COEFFICIENTGOVERNMENT DECISION MAKINGHIGH INFLATIONINCOMEINCOME GROUPSINCOME GROWTHINCOME INEQUALITYINCOME INEQUALITY DATAINCOME LEVELINCOME PER CAPITAINCOME TAXATIONINEQUALITY COEFFICIENTINEQUALITY DATAINEQUALITY MEASURESINEQUALITY OBSERVATIONSINEQUALITY VARIABLESINSTITUTIONAL ARRANGEMENTSINSTITUTIONAL ENVIRONMENTINSTITUTIONAL VARIABLESINTEREST RATEINTEREST RATESINVESTMENT CLIMATELAND INEQUALITYLAND OWNERSHIPLINGUISTIC FRACTIONALIZATIONLINGUISTIC GROUPLINK BETWEEN INEQUALITY AND GROWTHLORENZ CURVEMEAN VALUEMEASUREMENT ERRORMEDIAN VOTERMEDIAN VOTERSMONETARY POLICYMORAL HAZARDNEGATIVE COEFFICIENTNEGATIVE EFFECTNEGATIVE RELATIONSHIPNET EFFECTOILPARLIAMENTPER CAPITA INCOMEPOLARIZATION MEASURESPOLICY DECISIONSPOLICY MAKINGPOLICY RESEARCHPOLITICAL CONDITIONSPOLITICAL CONFLICTPOLITICAL ECONOMYPOLITICAL FREEDOMSPOLITICAL INSTITUTIONSPOLITICAL PARTIESPOLITICAL SCIENCEPOLITICAL SCIENCE LITERATUREPOLITICAL SYSTEMSPOLITICAL VIOLENCEPOSITIVE EFFECTPRIME MINISTERPROPERTY RIGHTSREGRESSION ANALYSISREVERSE CAUSATIONSIGNIFICANT NEGATIVESOCIAL CONFLICTSOCIAL POLARIZATIONTERMS OF TRADEVETO POWERWEALTH POLITICAL INSTITUTIONSGOVERNMENT DECISION-MAKINGEXTERNAL SHOCKSCREDITWORTHINESSGOVERNMENT COMMITMENTSPOLITICAL ENVIRONMENTETHNIC CONFLICTSOCIAL BEHAVIORSOCIAL CONFLICTSSOCIAL ISOLATIONINCOME LEVELSSOCIOECONOMIC CONDITIONSPOLITICAL INSTITUTIONSWEALTH10.1596/1813-9450-2920