Good Credit Ratios, Bad Credit Ratings: The Role of Debt Structure

Abstract

Many emerging market economies suffer from bad credit ratings, limited access to finance, and large and unstable risk premia. Policymakers usually attribute this result to weak fiscal policies: countries run large deficits and accumulate debt that puts them on the brink of insolvency.

Keywords

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I am indebted to the discussant, Mario Teijeiro, as well as Ugo Panizza, Dani Rodrik, Roberto Rigobón, George Kopits, Andrés Velasco, conference participants and an anonymous referee for useful comments. I have made liberal use of the database developed jointly with Ugo Panizza and Alejandro Riaño. I would like to thank Luisa Palacios and Alejandro Riaño for able research assistance.