11:00 - 13:15
Thursday-Panel
Chair/s:
Jonas Bunte
Discussant/s:
Thomas Sattler
Meeting Room G

Matthew Digiuseppe, Alexander Slaski, Patrick Shea
Discounting Government Debt: Individual attitudes towards debt reduction in Brazil

Kathleen Brown
Determinants of China’s Hidden Overseas Lending

Jonas Bunte, Burak Giray, Patrick Shea
Selling Sovereignty: International Coercion, Debt Diplomacy, and Land Transactions

Barry Maydom, Ana Isabel Lopez Garcia
Migration, Remittances and the Fiscal Contract
Discounting Government Debt: Individual attitudes towards debt reduction in Brazil
Matthew Digiuseppe 1, Alexander Slaski 2, Patrick Shea 3
1 Leiden University
2 Leiden University
3 University of Houston

Government support for debt reduction requires popular support. Yet, there is considerable disagreement about what drives citizens’ support for debt consolidation and how they approach intertemporal dynamics requiring a contemporary investment to avoid future calamity. Do individuals delay consolidation because they discount the future for irrational reason? Or is discouting behavior driven by rational distrust in government? Or are individuals primarily motivated by distributive conflict over who bares the burden of fiscal adjustment? This paper presents the results of a innovative conjoint choice survey that tests how temporal discounting and distributive conflict interact to influence support for debt consolidation. We find that, among our 2,000 Brazilian respondents, distributive pressures are a central reason for the delay in fiscal adjustment. However, this distributive pressure is weakened as the potential for a crisis is more proximate. Importantly, our design also allows us to explore individual variation in response to our treatments. We find that respondents that are more likely to discount future individual welfare payments are also more likely to exhibit discounting behavior towards policy. The findings provide insight into the microfoundations of debt crises in emerging markets but hold relevance for other policy issues, like climate change, that have similar temporal dynamics.