Healthy domestic variables can smooth rating downgrades, paper finds
Bank of Spain analysed ratings in 67 countries
Having healthy domestic fundamentals can "influence" rating agencies when they consider whether or not to downgrade a country's sovereign rating, according to a Bank of Spain working paper published today, but less so when it comes to upgrades.
In Sovereign ratings and their asymmetric response to fundamentals, Carmen Broto and Luis Molina estimate a panel data model for 67 countries, both developed and emerging economies, based on Standard & Poor's ratings, finding that "changes in sovereign
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