An IMF paper published in May shows that emerging0market countries that seek to improve their investment grade status to lower financing costs for debt sovereign can cut their borrowing costs significantly by reducing their public debt levels.

Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds that, to a large extent, investment grade rating assignments can be explained by a handful of variables.

The paper by Jaramillo builds on the literature on the