Doctoral Dissertation Research in Political Science: What Drives Subnational Borrowing Conditions? Social Spending and Government Size

世界各国政府越来越依赖信贷市场。这种依赖增强了投资者根据政府的政策责任、规模和其他潜在的投资者利润驱动因素来奖励或惩罚政府的能力。本项目考察了与地方和地区政府相关的市场奖惩来源。它解决了两个问题。首先，国际评级机构是否会惩罚地方和地区政府在医疗、教育和其他核心社会服务职能方面的支出？其次，哪些政府能以最好的条件借款：代表大辖区的还是代表小辖区的？这位研究人员认为，投资者会因为政府在医疗保健和其他政治上敏感的社会服务方面的高水平支出等僵化的社会承诺而惩罚政府。这些承诺使大量选民和加入工会的服务提供者受益，因此很难削减。这限制了地方和地区政府平衡预算可能需要的财政灵活性，导致投资者要求提高公共债券和贷款的利率。但这些反应被几个国家层面的因素所抵消，包括地方政府调整收入和支出的权力、国家财政和经济表现，以及国家救助的可能性。这位研究人员还认为，与公认的智慧相反，小政府往往比大型发债方借款条件更好。尽管投资者看重大型发行人的债券的流动性，但他们也看重多元化。投资于相对稀缺的小政府债券，可以让投资者从更丰富的大型发行方工具中解脱出来。但规模的相对优势也取决于市场条件及其与投资者流动性偏好的相互作用。流动性需求随着市场波动而增加，导致资金从小国政府的证券流向大国政府的证券。这些资金外逃的强度取决于投资者的流动性偏好，而这种偏好在不同的时间和国家有所不同。这项工作使用广泛的定量和定性方法和数据来检验这些说法，包括对信用评级和方法的广泛跨国分析，对加拿大和德国地区借贷成本的更集中的统计研究，以及对债券承销商和投资者的半结构化访谈。这项工作促进了政治学和经济学的跨学科研究。首先，它是对金融全球化对地方社会服务提供影响的第一次广泛的跨国分析。迄今为止，奖学金几乎完全集中在国家一级，而社会服务的提供则在很大程度上分散了。其次，该项目推进了经济主体对社会支出偏好的研究。第三，促进财政联邦制和地方救助担保工作。与大量文献相反，它几乎没有发现将救助担保与地方财政依赖联系起来的证据，但它确实发现了将担保与其他因素联系起来的证据。最后，它推动了关于财政分权对大小政府利弊的辩论。这项研究有几个更广泛的贡献。它揭示了在一个财政紧缩和财政不确定的时代，分散的社会支出的可持续性。它还加强了对公共借贷成本、政府规模和全球日益普遍的按市值计价会计做法之间联系的理解。此外，它还阐明了地方政府纾困担保的决定因素。

The world's governments are growing increasingly dependent on credit markets. This dependence is strengthening investors' capacity to reward or punish governments for their policy responsibilities, size, and other potential drivers of investor profits. This project examines sources of market punishments and rewards as they relate to local and regional governments. It addresses two questions. First, do international rating agencies penalize local and regional governments for spending on health care, education, and other core social service functions? Second, which governments borrow on the best terms: those representing large or small jurisdictions? The researcher argues that investors penalize governments for rigid social commitments: high levels of spending on health care and other politically sensitive social services. These commitments benefit large numbers of voters and unionized service providers and are correspondingly difficult to cut. This limits the fiscal flexibility that local and regional governments may require to balance budgets, causing investors to demand higher interest rates on public bonds and loans. But these reactions are offset by several national-level factors, including sub-national authority to adjust revenues and expenditures, national fiscal and economic performance, and the likelihood of national bailouts. The researcher also argues that, contrary to received wisdom, small governments often borrow on better terms than do large issuers. Although investors value the debt of large issuers for its liquidity, they also value diversification. Investing in the relatively scarce debt of small governments allows investors to diversify away from the more plentiful instruments of large issuers. But the relative advantages of size also depend on market conditions and their interactions with investors' liquidity preferences. Liquidity needs increase with market volatility, inducing flights from the securities of small to the securities of large governments. The intensity of these flights depends on investors' liquidity preferences, which vary across time and countries. This work tests these claims using a wide range of quantitative and qualitative methods and data, including broad cross-national analysis of credit ratings and methodologies, a more focused statistical look at regional borrowing costs in Canada and Germany, and semi-structured interviews with bond underwriters and investors. This work advances interdisciplinary research in political science and economics. First, it stands as the first broadly cross-national analysis of the effects of financial globalization on sub-national provision of social services. Scholarship to date has focused almost exclusively on the national level, while provision of social services has been decentralized to significant degrees. Second, this project advances research on economic agents' preferences over social spending. Third, the project contributes to work on fiscal federalism and sub-national bailout guarantees. Contrary to a large literature, it finds little evidence linking bailout guarantees to sub-national fiscal dependence, but it does find evidence linking guarantees to other factors. Finally, it advances debates about the merits of fiscal decentralization for big and small governments. This research makes several broader contributions. It sheds light on the sustainability of decentralized social spending in an age of austerity and financial uncertainty. It also enhances understanding of the links between public borrowing costs, government size, and the mark-to-market accounting practices increasingly prevalent across the globe. In addition, it illuminates the determinants of sub-national bailout guarantees.