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With regard to actually predicting default,13 the agencies' performance has been mixed. Reinhart (2002), using data from 1979-1999, found that credit ratings have systematically failed to anticipate currency crises and that nearly half of all defaults were linked with a currency crisis. Moreover, default did not occur in some cases due to IMF intervention and assistance. The report concluded that rating agencies were reactive, especially with respect to emerging markets.
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=298262
==Index and Glossary==
Default, Currency Crises and Sovereign Credit Ratings
There is an index to the topics dealt with in the economics articles [[Economics/Related Articles|here]], and a glossary of economic terms [[Economics/Glossary|here]].


Carmen M. Reinhart
See also the  [[Politics/Index|'''index to the politics articles ''']].
University of Maryland - School of Public Affairs; National Bureau of Economic Research (NBER)


[[User:Nick_Gardner#Methodology|methodology]]


January 2002
{|align="right" cellpadding="10" style="background-color:#FFFFCC; width:40%; border: 1px solid #aaa; margin:20px; font-size: 92%;"
|"''The European Union is something ...
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights.''"


NBER Working Paper No. W8738
:Merci Olsson, of Nobel Med, congratulating  President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
 
|}
1. Political risk
- Stability, predictability and transparency of political institutions
- Public and national security
- Responsiveness to change and adapt
2. Income and Economic Structure
- Degree economy is market-oriented
- Extent of property rights
- Per-Capita GDP
3. Economic Growth Prospects
- Changes in standard of living
- Income distribution
4. Fiscal Flexibility
- Tax revenues, expenditures and past performance in balancing budgets
- Methods of deficit financing and their inflationary impact
- Growth friendly tax system and the ease of which it can be changed
- Efficiency of expenditures
5. Government Debt Burden
- Extent to which government can pay and manage its debt
6. Off-Budget and Contingent Liabilities
- Size and health of non-financial public sector enterprises
- Health of financial and banking system
7. Monetary Stability
- Credit trends
- Price behavior in past economic cycles
- Level, currency and maturity of public sector debt
- Money and credit expansion
- Independence of central bank
- Compatibility of exchange rate regime with monetary policy
- The range and efficiency of monetary policy tools
- Depth and breadth of capital markets
8. External Liquidity
- Structure of merchandise trade, service, income and transfers
- Vulnerability to changes in investor sentiment
- Gross external financing as a percentage of official foreign exchange reserves
9. Private Sector Debt Burdens
- Residents assets and liabilities
10. Public Sector Debt Burdens
- Trends in public sector debt
- Contingent liabilities
- Foreign exchange reserves
 
Table 3: Moody’s Sovereign Categories
1. Economic Structure and Performance
- GDP, inflation, population, GNP per capita, unemployment, imports and exports
2. Fiscal Indicators
- Government revenues, expenditures, balance, debt all as percentage of GDP
3. External Payments and Debt
- Exchange rate, labor costs, current account, foreign currency debt and debt service ratio
4. Monetary and Liquidity Factors
- Short-term interest rates, domestic credit, M2/foreign exchange reserves, maturing debt/foreign exchange reserves, liabilities of banks/assets of banks
 
 
#  Enron was rated investment grade by the NRSRO's four days before bankruptcy;
 
# The California utilities were rated "A-" two weeks before defaulting;
 
# WorldCom was rated investment grade three months before filing for bankruptcy;
 
# Global Crossing was rated investment grade in March 2002 and defaulted on loans in July 2002;
 
# AT&T Canada was rated investment grade in early February 2002 and defaulted in September 2002; and
 
# ABB was rated "A2" by Moody's as of March 14th 2002 and was rated "Ba2", negative watch as of October 31, 2002. Similarly, S&P rated ABB at "A+" as of March 14th, 2002 and "BBB-", negative watch as of November 5 th 2002.  
S
Failures
 
Enron November 2001 Orange County California, Mercury Finance, Pacific Gas & Electric, Enron, WorldCom, Delphi, General Motors and Ford.
 
 
FINANCIAL GATEKEEPERS: CAN THEY PROTECT INVESTORS?, Yasuyuki Fuchita, Robert E. Litan, eds., Brookings Institution Press and the Nomura Institute of Capital Markets Research, 2006
San Diego Legal Studies Paper No. 07-46
 
 
 
{{reflist}}

Latest revision as of 03:28, 22 November 2023


The account of this former contributor was not re-activated after the server upgrade of March 2022.


Index and Glossary

There is an index to the topics dealt with in the economics articles here, and a glossary of economic terms here.

See also the index to the politics articles .

methodology

"The European Union is something ... 
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights."
Merci Olsson, of Nobel Med, congratulating President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
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