Can I read When Technocratic Appointments Signal Credibility on EtoBox?

When Technocratic Appointments Signal Credibility by Despina Alexiadou; William Spaniel; Hakan Gunaydin is a Social Sciences article available to read on EtoBox.

What is When Technocratic Appointments Signal Credibility about?

How do prime ministers manage investors’ expectations during financial crises? We take a novel approach to this question by investigating ministerial appointments. When prime ministers appoint technocrats, defined as non-partisan experts, they forgo political benefits and can credibly signal their willingness to pay down their debt obligations. This reduces bond yields, but only at times when the market is sensitive to expected repayments—that is, during crises. To examine the theory, we develop an event study analysis that employs new data on the background of finance ministers in 21 Western and Eastern European democracies. We find that investors reward technocratic appointments by reducing a country’s borrowing costs. Consistent with the theory, technocratic appointments under crises predict lower bond yields. Our findings contribute to the literature on the interplay of financial markets and domestic politics.

Who reads When Technocratic Appointments Signal Credibility?

Author

Despina Alexiadou; William Spaniel; Hakan Gunaydin

Publisher

SAGE Publications

Published

2021

Language

EN

Field

Social Sciences