Social Polarization, Social Institutions, and Country Creditworthiness
The literature argues that the presence
of multiple veto players (government decisionmakers) with
polarized interests increases the credibility of sovereign
commitments, but reduces the ability of governments to
adjust policies in the event of exogenous shocks that
jeopardize their ability to honor their commitments. In the
case of sovereign lending, if the first effect prevails,
countries would be regarded as more creditworthy; if the