## International Commodity Price Shocks, Democracy, and External Debt

_IMF Working Papers, March 1, 2010_

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**Canonical URL:** [International Commodity Price Shocks, Democracy, and External Debt](https://www.imf.org/en/publications/wp/issues/2016/12/31/international-commodity-price-shocks-democracy-and-external-debt-23646)

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## Bibliographic details
- Authors: Markus Bruckner, Rabah Arezki
- Published: March 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451963427.001

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### Summary of study
- Sample: panel data for a world sample of 93 countries spanning the period 1970-2007.
- Main finding: positive commodity price shocks lead to a significant reduction in the level of external debt in democracies, but to no significant reduction in the level of external debt in autocracies.

### Empirical findings
- External debt response:
  - Democracies: positive commodity price shocks → significant reduction in the level of external debt.
  - Autocracies: positive commodity price shocks → no significant reduction in the level of external debt.
- Government expenditures:
  - Autocracies: positive commodity price shocks lead to a statistically significant and quantitatively large increase in total government expenditures.
  - Democracies: government expenditures did not increase significantly following positive commodity price shocks.
- Default risk on external debt:
  - Democracies: following positive windfalls from international commodity price shocks, the risk of default on external debt decreased.
  - Autocracies: following positive windfalls, the risk of default on external debt increased significantly.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/international-commodity-price-shocks-democracy-and-external-debt-23646_