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Enregistrement W2993046174

Sovereign Credit Quality in the Eurozone: A Preliminary Classification System

2013· article· en· W2993046174 sur OpenAlex
G. N. Naidu, Askar H. Choudhury

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Notice bibliographique

RevueJournal of economics and economic education research · 2013
Typearticle
Langueen
DomaineEconomics, Econometrics and Finance
ThématiqueEconomic, financial, and policy analysis
Établissements canadiensnon disponible
Organismes subventionnairesnon disponible
Mots-clésTreasuryCredit ratingEconomicsBondFinancial systemDebtBond credit ratingBond marketCredit riskInterest rateDebtorFinanceEconomic policyCredit referenceCreditorLawPolitical science
DOInon disponible

Résumé

récupéré en direct d'OpenAlex

INTRODUCTION AND BACKGROUND Sovereign credit risk is receiving growing attention over the last three years heightened by the effects of financial crisis of 2008. To minimize the damage induced by the financial crisis western nations accepted transfer of a significant portion of private sector debt onto their respective balance sheets. The anemic economic growth rates exacerbated their fiscal woes which, in turn resulted in steeply rising debt/GDP ratios. Alarmed by this trend, the bond rating agencies began issuing watches and warnings of credit downgrades. The world's largest debtor nation, the U.S.A was not spared. The Standard & Poor's rating agency lowered U.S. Treasury debt rating to [AA.sup.+]. This is a significant blow to the U.S. credibility and left a historic blemish in its credit record. Theoretically, finance text books can no longer treat U.S. Treasury yield as a surrogate for Risk-Free rate. As a practical matter, the U.S, debt downgrade did not materially affect Treasury's borrowing cost. This is because of the Federal Reserve's willingness to supply abundant credit. Currently, bond market is treating this development as temporary and insignificant. However, some new dangers may yet lie ahead for public finances of several western nations as the new round of capital standards are enforced by Basel committee and the Volker rule under Dodd-Frank Bill is implemented in the U.S. While the western nations, in general, experienced weakening of their public finances, some nations like Canada, Germany, UK, and Brazil seem to be holding up quite well. Fiscal Fissures in the Eurozone The move to adopt a common currency with single monetary policy but without a commonly enforced fiscal discipline is flawed from the outset. Adopting a strong currency ([euro]), which is essentially a derivative of Deutsche mark does not help an economically weak member country to compete effectively in export markets. This relatively weak external trade position forces a nation to import more capital (mostly through the sale of debt instruments) to sustain itself. Continuation of status quo does not help the weak country to improve its competitive position. Continuously growing dependence on external capital inflows to cover its rising trade imbalances can only make the country fiscally unsound. Without an automatic punitive trigger, an economically weak country such as, Spain, Greece or Italy can get into a downward spiral without a proper recourse and can cause the bonds of currency union to rupture. Strong currency for an externally noncompetitive economy is no cure for its ills. The Eurozone has to rethink and redesign its economic union so as to foster an enduring harmony in their economic profiles. Sovereign Credit Quality A credit rating is simply a reflection of the borrower's ability and willingness to return the principal along with the interest to the lender. When the borrower and the lender are both legally domiciled in a single nation, it is convenient for the lender to assess and monitor the borrower's ability to pay. The legal system can act as an imposing deterrent to the laxity in payment. However, when the borrower and lender are separated by boundaries, the lender does not have as much enforcing power to motivate a less willing borrower to pay. In addition, if the borrower is a sovereign nation, a foreign lender (bond buyer) has little or no power to make an unwilling borrower to pay. Therefore, judging the borrowers willingness to pay is critical in assessing the credit risk of a sovereign borrower. A sovereign nation can get away with nonpayment in the name of national interest. History is replete with the examples from Greece, Central Europe, Russia, and Latin America. In international lending, legal recourse to the borrower is very limited at best. In light of these limitations, the buyers of sovereign debt are entirely dependent upon the country's capacity to pay and willingness to pay becomes a paramount importance. …

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Prédiction distillée sur la base complète

Imitation des enseignants

Ni prévalence calibrée, ni vérité terrain. Validation humaine à venir. Apprise à partir de 10 348 étiquettes directes de Codex et de 10 348 étiquettes directes de Gemma. Le mode candidate est l'union des têtes enseignantes seuillées; le consensus est leur intersection. Ces sorties portent le statut machine_predicted_unvalidated et ne sont ni des étiquettes humaines ni des étiquettes directes de modèles de pointe.

score de la tête « metaresearch » (Codex)0,007
score de la tête « metaresearch » (Gemma)0,000
Version: codex-gemma-dda1882f352aStatut de validation: machine_predicted_unvalidated
Catégories candidatesCharge utile insuffisante (le modèle a refusé de juger)
Catégories consensuellesaucune
DomaineSignal candidat: aucune · Signal consensuel: aucune
Devis d'étudeSignal candidat: Théorique ou conceptuel · Signal consensuel: aucune
GenreSignal candidat: Empirique · Signal consensuel: Empirique
Score de désaccord entre enseignants0,720
Score d'incertitude au seuil1,000

Scores Codex et Gemma par catégorie

CatégorieCodexGemma
Métarecherche0,0070,000
Méta-épidémiologie (sens strict)0,0000,000
Méta-épidémiologie (sens large)0,0010,000
Bibliométrie0,0010,000
Études des sciences et des technologies0,0000,000
Communication savante0,0000,001
Science ouverte0,0010,000
Intégrité de la recherche0,0000,001
Charge utile insuffisante (le modèle a refusé de juger)0,0000,001

Scores machine (provisoires)

Les deux têtes enseignantes du modèle étudiant, lues sur ce travail. Un score ordonne la base pour la relecture; il n'affirme jamais une catégorie, et le statut de validation accompagne chaque rangée tel quel.

Scores de référence d'un modèle non mature (critères de maturité non atteints, 7 itérations). Un score ordonne; il n'affirme jamais une catégorie.

Tête enseignante Opus0,148
Tête enseignante GPT0,355
Écart entre enseignants0,207 · la distance entre les deux têtes enseignantes sur ce seul travail
Statut de validationscore_only:v0-immature-baseline · tel quel depuis la passe de notation : score_only signifie que le nombre peut ordonner les travaux, et qu'aucune étiquette de catégorie n'en découle