The role of sovereign credit ratings in fiscal discipline
This paper investigates several aspects of the relationship between sovereign credit ratings and fiscal discipline. The analysis of over one thousand country–year observations for 93 countries during the 1999–2010 period reveals that a country’s debt level is likely to increase with higher ratings,...
| Main Authors: | , , |
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| Format: | Article |
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Elsevier
2016
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| Online Access: | https://eprints.nottingham.ac.uk/39093/ |
| _version_ | 1848795762076418048 |
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| author | Duygun, Meryem Ozturk, Huseyin Shaban, Mohamed |
| author_facet | Duygun, Meryem Ozturk, Huseyin Shaban, Mohamed |
| author_sort | Duygun, Meryem |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | This paper investigates several aspects of the relationship between sovereign credit ratings and fiscal discipline. The analysis of over one thousand country–year observations for 93 countries during the 1999–2010 period reveals that a country’s debt level is likely to increase with higher ratings, confirming the existence of pro–cyclicality and path dependence of ratings. In addition, the study finds no evidence to support the theory of Political Business Cycle, which implies that political ambitions may lead to fiscal worsening following a rating upgrade. The study findings further demonstrate that institutional quality is an important factor in the ratings–fiscal discipline nexus. |
| first_indexed | 2025-11-14T19:37:14Z |
| format | Article |
| id | nottingham-39093 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:37:14Z |
| publishDate | 2016 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-390932020-05-04T17:50:45Z https://eprints.nottingham.ac.uk/39093/ The role of sovereign credit ratings in fiscal discipline Duygun, Meryem Ozturk, Huseyin Shaban, Mohamed This paper investigates several aspects of the relationship between sovereign credit ratings and fiscal discipline. The analysis of over one thousand country–year observations for 93 countries during the 1999–2010 period reveals that a country’s debt level is likely to increase with higher ratings, confirming the existence of pro–cyclicality and path dependence of ratings. In addition, the study finds no evidence to support the theory of Political Business Cycle, which implies that political ambitions may lead to fiscal worsening following a rating upgrade. The study findings further demonstrate that institutional quality is an important factor in the ratings–fiscal discipline nexus. Elsevier 2016-05-24 Article PeerReviewed Duygun, Meryem, Ozturk, Huseyin and Shaban, Mohamed (2016) The role of sovereign credit ratings in fiscal discipline. Emerging Markets Review, 27 . pp. 197-216. ISSN 1566-0141 http://www.sciencedirect.com/science/article/pii/S156601411630019X doi:10.1016/j.ememar.2016.05.002 doi:10.1016/j.ememar.2016.05.002 |
| spellingShingle | Duygun, Meryem Ozturk, Huseyin Shaban, Mohamed The role of sovereign credit ratings in fiscal discipline |
| title | The role of sovereign credit ratings in fiscal discipline |
| title_full | The role of sovereign credit ratings in fiscal discipline |
| title_fullStr | The role of sovereign credit ratings in fiscal discipline |
| title_full_unstemmed | The role of sovereign credit ratings in fiscal discipline |
| title_short | The role of sovereign credit ratings in fiscal discipline |
| title_sort | role of sovereign credit ratings in fiscal discipline |
| url | https://eprints.nottingham.ac.uk/39093/ https://eprints.nottingham.ac.uk/39093/ https://eprints.nottingham.ac.uk/39093/ |