We develop a political economy model of sovereign debt that shows that income inequality leads to popular pressures on the government to use foreign debt to finance a redistribution of income at the expense of productive public investment. Recognizing this fact, international lenders impose...

The empirical evidence on the Kuznets hypothesis ranges from positive or negative support to insignificant relationships. This hypothesis is typically tried in most studies in domains different than the one conceived by Kuznets, which pertains to the industrialization-led urbanization (i.e.,...