The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings
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The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings
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Author : Metodij Hadzi-Vaskov
language : en
Publisher: International Monetary Fund
Release Date : 2019-07-26
The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings written by Metodij Hadzi-Vaskov and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-26 with Business & Economics categories.
This study investigates the nonlinear relationship between public debt and sovereign credit ratings, using a wide sample of over one hundred advanced, emerging, and developing economies. It finds that: i) higher public debt lowers the probability of being placed in a higher rating category; ii) the negative debt-ratings relationship is nonlinear and depends on the rating grade itself; and iii) the identified nonlinearity explains the differential impact of debt on ratings in advanced economies versus in emerging markets and developing economies. These results hold for both gross debt and net debt, and are robust to alternative dependent variable definitions, analytical techniques, and empirical specifications. These findings underscore the potential for fiscal consolidation in helping countries achieve a better credit rating.
The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings
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Author : Metodij Hadzi-Vaskov
language : en
Publisher: International Monetary Fund
Release Date : 2019-07-26
The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings written by Metodij Hadzi-Vaskov and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-26 with Business & Economics categories.
This study investigates the nonlinear relationship between public debt and sovereign credit ratings, using a wide sample of over one hundred advanced, emerging, and developing economies. It finds that: i) higher public debt lowers the probability of being placed in a higher rating category; ii) the negative debt-ratings relationship is nonlinear and depends on the rating grade itself; and iii) the identified nonlinearity explains the differential impact of debt on ratings in advanced economies versus in emerging markets and developing economies. These results hold for both gross debt and net debt, and are robust to alternative dependent variable definitions, analytical techniques, and empirical specifications. These findings underscore the potential for fiscal consolidation in helping countries achieve a better credit rating.
Sovereign Debt
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Author : S. Ali Abbas
language : en
Publisher: Oxford University Press
Release Date : 2019-10-21
Sovereign Debt written by S. Ali Abbas and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-21 with Business & Economics categories.
The last time global sovereign debt reached the level seen today was at the end of the Second World War, and this shaped a generation of economic policymaking. International institutions were transformed, country policies were often draconian and distortive, and many crises ensued. By the early 1970s, when debt fell back to pre-war levels, the world was radically different. It is likely that changes of a similar magnitude -for better and for worse - will play out over coming decades. Sovereign Debt: A Guide for Economists and Practitioners is an attempt to build some structure around the issues of sovereign debt to help guide economists, practitioners and policymakers through this complicated, but not intractable, subject. Sovereign Debt brings together some of the world's leading researchers and specialists in sovereign debt to cover a range of sub-disciplines within this vast topic. It explores debt management with debt sustainability; debt reduction policies with crisis prevention policies; and the history with the conjuncture. It is a foundation text for all those interested in sovereign debt, with a particular focus real world examples and issues.
Public Debt And Growth
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Author : Jaejoon Woo
language : en
Publisher: International Monetary Fund
Release Date : 2010-07-01
Public Debt And Growth written by Jaejoon Woo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-07-01 with Business & Economics categories.
This paper explores the impact of high public debt on long-run economic growth. The analysis, based on a panel of advanced and emerging economies over almost four decades, takes into account a broad range of determinants of growth as well as various estimation issues including reverse causality and endogeneity. In addition, threshold effects, nonlinearities, and differences between advanced and emerging market economies are examined. The empirical results suggest an inverse relationship between initial debt and subsequent growth, controlling for other determinants of growth: on average, a 10 percentage point increase in the initial debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of around 0.2 percentage points per year, with the impact being somewhat smaller in advanced economies. There is some evidence of nonlinearity with higher levels of initial debt having a proportionately larger negative effect on subsequent growth. Analysis of the components of growth suggests that the adverse effect largely reflects a slowdown in labor productivity growth mainly due to reduced investment and slower growth of capital stock.
Rating Through The Cycle
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Author : Mr.John Kiff
language : en
Publisher: International Monetary Fund
Release Date : 2013-03-08
Rating Through The Cycle written by Mr.John Kiff and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-03-08 with Business & Economics categories.
Credit rating agencies face a difficult trade-off between delivering both accurate and stable ratings. In particular, its users have consistently expressed a preference for rating stability, driven by the transactions costs induced by trading when ratings change frequently. Rating agencies generally assign ratings on a through-the-cycle basis whereas banks' internal valuations are often based on a point-in-time performance, that is they are related to the current value of the rated entity's or instrument's underlying assets. This paper compares the two approaches and assesses their impact on rating stability and accuracy. We find that while through-the-cycle ratings are initially more stable, they are prone to rating cliff effects and also suffer from inferior performance in predicting future defaults. This is because they are typically smooth and delay rating changes. Using a through-the-crisis methodology that uses a more stringent stress test goes halfway toward mitigating cliff effects, but is still prone to discretionary rating change delays.
Public Debt And Economic Growth
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Author : Alfred Greiner
language : en
Publisher: Springer Science & Business Media
Release Date : 2009-07-24
Public Debt And Economic Growth written by Alfred Greiner and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-07-24 with Business & Economics categories.
Starting point of this book is the observation that an increase in public debt must be accompanied by a rise in the primary surplus of the government to guarantee sustainability of public debt. The book first elaborates on that principle from a theoretical point of view and then tests whether empirical evidence for that rule can be found. Additional tests are implemented to gain further evidence on sustainability of public debt. In order to allow for time varying coefficients penalized spline estimations are performed. The theoretical chapters present endogenous growth models and assume that the primary surplus rises as public debt increases so that sustainability of public debt is given. Implications of public deficits and debt are studied assuming full employment and for unemployment. The conclusion summarizes the findings and compares the results of the different models. Finally, policy implications are given showing how governments should deal with high public debt to GDP ratios.
Public Debt Sustainability In Developing Asia
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Author : Benno Ferrarini
language : en
Publisher: Routledge
Release Date : 2012
Public Debt Sustainability In Developing Asia written by Benno Ferrarini and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Business & Economics categories.
Addressing the global financial crisis has required fiscal intervention on a substantial scale by governments around the world. The consequent buildup of public debt, in particular its sustainability, has moved to center stage in the policy debate. If the Asia and Pacific region is to continue to serve as an engine for global growth, its public debt must be sustainable. Public Debt Sustainability in Developing Asia addresses this issue for Asia and the Pacific as a whole as well as for three of the most dynamic economies in the region: the People’s Republic of China, India, and Viet Nam. The book begins with a discussion of the reasons for increased attention to debt-related issues. It also introduces fiscal indicators for the Asian Development. Bank’s developing member countries and economies. The sustainability of their debt is assessed through extant approaches and with the most up-to-date data sources. The book also surveys the existing literature on debt sustainability, outlining the main issues related to it, and discusses the key implications for the application of debt sustainability analysis in developing Asia. Also highlighted is the importance of conducting individual country studies in view of wide variations in definitions of public expenditure, revenues, contingent liabilities, government structures (e.g., federal), and the like, as well as the impact of debt on interest rates. The book further provides in-depth debt sustainability analyses for the People’s Republic of China, India, and Viet Nam. Public Debt Sustainability in Developing Asia offers a comprehensive analytical and empirical update on the sustainability of public debt in the region. It breaks new ground in examining characteristics that are crucial to understanding sustainability and offers richer policy analysis that should prove useful for policymakers, researchers, and graduate students.
Do Financial Markets Value Quality Of Fiscal Governance
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Author : Kady Keita
language : en
Publisher: International Monetary Fund
Release Date : 2019-10-11
Do Financial Markets Value Quality Of Fiscal Governance written by Kady Keita and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-11 with Business & Economics categories.
We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy.
Care Homes In A Turbulent Era
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Author : Komla Dzigbede
language : en
Publisher: Edward Elgar Publishing
Release Date : 2023-08-14
Care Homes In A Turbulent Era written by Komla Dzigbede and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-08-14 with Political Science categories.
This scholarly Research Handbook captures key observations and analyses within the field of public financial management. It offers much-needed insights into possible future research ventures while presenting contemporary summaries of past studies in this ever-evolving field.
The Sovereign Debt Crisis
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Author : Anton Brender
language : en
Publisher:
Release Date : 2013
The Sovereign Debt Crisis written by Anton Brender and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Business & Economics categories.
"The Sovereign Debt Crisis," 2012 edition, looked at how governments ran up substantial deficits in order to avert a worldwide depression and their subsequent attempts to rebalance their budgets. This updated edition concentrates on the delicate balancing act the economies of the United States, Japan, and the eurozone face between the present need to boost sluggish economic growth by providing sufficiently cheap, low-risk credit and the longer-term challenges of cutting massive debt and returning to a sustainable fiscal policy. The authors argue that many of the euro area economies, having noticeable difficulty paying their international debts, are in a sovereign debt crisis, while America and Japan are, for now, holding steady but in real danger of slipping into crisis. The book shows how the process has evolved in these three major developed economies and how their policy choices impact global financial markets.