Open AccessThe Political Economy of Speculative Attacks in the Developing World
Author(s) -
Leblang David A.
Publication year - 2002
Publication title -
international studies quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.897
H-Index - 100
eISSN - 1468-2478
pISSN - 0020-8833
DOI - 10.1111/1468-2478.00223
Subject(s) - developing country , politics , economics , sample (material) , empirical evidence , capital (architecture) , development economics , political economy , political science , economic growth , geography , law , philosophy , chemistry , archaeology , epistemology , chromatography
This paper examines the relationship between politics and speculative attacks in developing countries. While a burgeoning literature focuses on the economic determinants of speculative behavior, little attention has been paid to the importance of political factors. I examine the response of international capital markets to electoral and partisan changes in a sample of 78 developing countries using monthly data from January 1975 to December 1998. All other things being equal, the empirical evidence indicates that speculative attacks are more likely (1) under left rather than under right governments and (2) during the period after an election as compared with all other periods. The results suggest that models developed for OECD economies can be used to understand political‐economic phenomena in developing countries.