Template-Type: ReDIF-Paper 1.0
Author-Name: Olivier  Blanchard
Author-Name-First: Olivier 
Author-Name-Last: Blanchard
Author-Email: 
Author-Workplace-Name: Peterson Institute for International Economics, Paris School of Economics, and Massachusetts Institute of Technology
Author-Name: Daniel  Leigh
Author-Name-First: Daniel 
Author-Name-Last: Leigh
Author-Email: 
Author-Workplace-Name: International Monetary Fund
Author-Name: Prachi  Mishra
Author-Name-First: Prachi 
Author-Name-Last: Mishra
Author-Email: 
Author-Workplace-Name: Ashoka University
Title: Ratings, Debt, and Deficits: An Exploration
Abstract: We look at the effects of debt and primary fiscal balances on sovereign credit ratings through the lens of a simple model. We find that the ratings differ from the implications of the model in three important ways. They give much more weight to debt relative to forecast primary balances. They understate the effects of the difference between the interest rate and the growth rate. They give a very large role to country effects. For the same level of debt and forecast primary balances, they imply extremely different ratings across countries, and imply extremely different levels of debt needed to reach a given rating.
length: 46
Creation-Date: 20260921
Revision-Date: 
Publication-Status: 
File-URL: https://dp.ashoka.edu.in/ash/wpaper/paper171_0.pdf
File-Format: Application/pdf
Number: 171
Handle: RePEc:ash:wpaper:171