Diss. Universität Duisburg-Essen, 2008. / Business and Economics (German Language) (Springer-11775) (GWV).

Diss. Universität Duisburg-Essen, 2008. / Business and Economics (German Language) (Springer-11775) (GWV).

Diss. HHL - Leipzig Graduate School of Management, 2008. / Business and Economics (German Language) (Springer-11775) (GWV).

Diss. HHL - Leipzig Graduate School of Management, 2008. / Business and Economics (German Language) (Springer-11775) (GWV).

Inaug.-diss.--Freiburg (Schweiz).

Diss. Univ. München, 2006.

No description available.

No description available.

Economic integration between major powers has long been viewed as a force for international stability. The intuitive logic is appealing: states that are trading with and investing in each other stand to lose if that commerce is jeopardized by conflict. Yet there are sound reasons for supposing that such deepening economic integration can also shift the balance of power between major states, by causing follower economies – states that are not among the most developed in the international system – to grow faster than leading economies, and economic size and development are what underpin national material capabilities. Moreover, a rich body of theory and history suggests that such shifts in the balance of power make interstate war more likely. This dissertation argues, therefore, that economic integration can actually be a potent cause of security competition and war. A theoretical framework that unites economic theory on the differential growth impact of trade, financial flows, and technology diffusion with realist arguments on the conflict implications of polarity shifts and dynamic power differentials is constructed. It is then explored using evidence from three key historical cases: the rise of the Dutch Republic during the 1581-1648 period, the relative decline of the United Kingdom and the relative rise of other great powers between 1870 and 1914, and the differential growth rates and corresponding tensions of 1945-89. Certain scope conditions and qualifications notwithstanding, the empirical evidence supports the theoretical framework. As such, the argument that deepening economic integration raises the mutual cost of fighting and thereby makes conflict less likely is not directly refuted, but an important countervailing mechanism is found to be at work. Such a finding has implications for debates over the security implications of economic globalization, the foundations of realist theory, and the causes and potential consequences of the rise of new powers today.

Chapters 2-3: A global games approach to sovereign debt crises The first chapters present a model that investigates the risks involved when a fiscal authority attempts to roll-over a stock of debt and there is the potential for coordination failure by investors. A continuum of investors, after receiving signals about the authority's willingness to repay, decides whether to roll-over the stock of debt. If an insufficient proportion of investors participates, the authority defaults. With one fiscal authority, private information results in a deterministic outcome. When a public signal is available, the model behaves in a similar manner to a sunspot model. In line with much of the global games literature, improving public information has an ambiguous effect on welfare. Finally, the model is extended to include a second fiscal authority, which captures a similar sunspot result and illustrates the potential for externalities in fiscal policy. Lower debt in the less indebted authority can push a more indebted authority into crisis. Lower debt makes the healthier authority relatively more attractive, which causes the investors to treat the heavily indebted authority more conservatively. In certain circumstances, this is sufficient to cause a coordination failure. Chapter 4: A debt game with correlated information This chapter models of debt roll-over where a continuum of investors receives correlated signals on whether a debtor is solvent or insolvent. The investors face a collective action problem: a sufficient proportion of investors must agree to participate in the debt roll-over for it to be a success. If an insufficient proportion of investors participates in the deal, the debtor will default. The game has a unique switching strategy, which results in global uncertainty being preserved. The ex ante distribution of play (conditional on the true solvency of the debtor) follows a Vasicek credit distribution. The ex ante probability of a debt crisis is affected by the exogenous model parameters. Of particular interest is the observation that increasing private noise unambiguously reduces the probability of a debt crisis. Unsurprisingly, increasing the fiscal space or return on debt also decreases the probability of a crisis. Chapter 5: Bailouts and politics The final chapter examines the political-economic equilibrium in a two-period model with overlapping generations and a financial sector, which is inspired by the model in Tabellini (1989). The public policy is chosen under majority rule by the agents currently alive. It demonstrates that the bailout policy adopted in the second period has important effects on the bank's financing decisions in the first period. By adopting a riskier financing regime (i.e. higher leverage) in the first period, the older generation can extract consumption from the younger generation in the second period. Sovereign backstops of the financial sector are state-contingent: they can appear costless for long periods of time but eventually result in a socialization of private-sector debt. It is this mechanism that makes implementing capital requirements costly to investors yet beneficial to the younger generation. The model also highlights two important issues: (i) bank capital is endogenous and (ii) proposed resolution mechanisms must be politically credible. It suggests that a major benefit of increasing and narrowing equity-capital requirements or increasing liquidity ratios is that they are implemented ex ante and therefore available either to absorb losses in the event of a crisis or to reduce the possibility of large drops in asset values. Finally, this chapter also provides a structure by which to interpret the stylized facts of Calomiris et al. (2014): that more populist political institutions are associated with more fragile financial systems.