Broto, Carmen, Molina, Luis, (2015), “Sovereign ratings’ response to fundamentals during upgrade and downgrade periods”, Vox, 21 May
Credit ratings agencies have enormous power over countries in dire straits. But whether prevailing global economic conditions affect their assessments is rarely asked. This column suggests that credit ratings agencies overreact in downgrading countries credit ratings during times of economic crisis and instability, and underreact when upgrading during calmer times. This is bad news for policymakers who think that strong economic performance will get them back the credit rating they once took for granted.
Relevant Posts
- Gaillard, N., (2013), “Credit rating agencies and the Eurozone Crisis: What is the value of sovereign ratings?”, www.voxeu.org, 9 September.
- Wickens, M. and Polito, V., (2013), “A fiscal perspective on EU sovereign credit ratings: Did the credit-rating agencies get them right?”, VoxEU, 30 October.