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The standard view of the political economy of public debt is that myopic and un-constrained politicians prefer to disregard intertemporal smoothing considerations and extract political rents as fast as possible. From this perspective, it seems that the world has much to celebrate, as most emerging market economies-often suspect of having weak political institutions-have chosen to save rather than waste most of their exceptional income from high commodity prices. Quite the opposite, in the short run, governments with weak political institutions are likely to save more than governments with better institutions facing the same uncertainty.
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