Income distribution, sovereign debt, and public investment

Cem Karayalçin, Kathryn McCollister

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


We develop a political economy model of sovereign debt that shows that income inequality leads to popular pressures on the government to use foreign debt to finance a redistribution of income at the expense of productive public investment. Recognizing this fact, international lenders impose credit ceilings with the consequence that developing country borrowers invest less and grow slower.

Original languageEnglish (US)
Pages (from-to)351-365
Number of pages15
JournalEconomics and Politics
Issue number3
StatePublished - Nov 2005

ASJC Scopus subject areas

  • Economics and Econometrics


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