The Physical Consequences of Fiscal Flexibility: Sovereign Credit and Physical Integrity Rights

Abstract

Leaders are assumed to face fiscal constraints on their ability to remain in office by competitively distributing public and/or private goods. However, many leaders can relax this constraint by borrowing on sovereign credit markets. This article argues that states with the fiscal flexibility offered by favorable credit terms have the resources necessary to (1) respond to citizen demands with policies other than widespread repression and (2) avoid agency loss that may result in unauthorized repression by state agents. Empirical analyses indicate that creditworthy states have greater respect for physical integrity rights and are less likely to suffer diminished respect for those rights when facing violent dissent or negative shocks to government revenues.