Not Everything that Counts Can be Counted: A Critical Look at Risk Ratings and Governance Indicators
AbstractAccurately evaluating country risk and assessing the quality of governance in emerging market economies has become a priority of international corporations, investment banks and multilateral financial institutions. The rating system of the Political Risk Services (PRS) Group, the International Country Risk Guide (ICRG), constitutes one of the most influential time-series databases of country risk analysis. This study assesses the accuracy and predictive powers of the ICRG model, evaluating its ability to discern trends and highlight structural vulnerabilities, and thus to warn of impending crises. Three major crises are examined: the Brazilian financial crisis of 1999, the Argentine economic meltdown in December 2001 and the Peruvian political crisis of 2000. The study finds mixed results, which have important implications for research and policy.
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Bibliographic InfoArticle provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.
Volume (Year): 29 (2003)
Issue (Month): ()
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Find related papers by JEL classification:
- A10 - General Economics and Teaching - - General Economics - - - General
- F35 - International Economics - - International Finance - - - Foreign Aid
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martínez, Juan & Santiso, Javier, 2003. "Financial Markets and Politics: The Confidence Game in Latin American Emerging Economies," MPRA Paper 12909, University Library of Munich, Germany.
- Feldstein, Martin, 2002. "Argentina's Fall: Lessons from the Latest Financial Crisis," Scholarly Articles 2959849, Harvard University Department of Economics.
- Kaufmann, Daniel & Kraay, Aart, 2002.
"Growth without governance,"
Policy Research Working Paper Series
2928, The World Bank.
- Daniel Kaufmann, 2003. "Rethinking Governance: Empirical Lessons Challenge Orthodoxy," Macroeconomics 0308007, EconWPA.
- Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2012.
"On the Heterogeneity of Terror,"
IZA Discussion Papers
6596, Institute for the Study of Labor (IZA).
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