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The Rating Agencies In The International Political Economy

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  • Aggelos KOTIOS

    ()
    (Department of International and European Studies, University of Piraeus, Greece)

  • George GALANOS

    ()
    (Department of International and European Studies, University of Piraeus, Greece)

  • Spyros ROUKANAS

    ()
    (Department of International and European Studies, University of Piraeus, Greece)

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    Abstract

    The internationalization of the economy, the integration of national markets for goods, services and capital, the internationalization of production and generally augmentation of international movement of factors of production and the growing economic interdependence in recent decades have caused a rapid increase in the construction and use of indicators for assessing countries. Typically the comparative evaluation of countries is conducting, using simple or complex indicators, based on quantitative and / or qualitative variables. The results of comparative evaluation of counties usually concern the policy makers, markets and public opinion. The concentration of information in an index seems to have a practical significance and facilitate comparison between countries. From the position that a country conceives in the list of evaluation has certain economic and political implications. The different evaluation systems (indicators) of countries have however advantages and disadvantages. Many organizations for example publish indicators for the competitiveness of countries. Widely known indicators are competitiveness of World Economic Forum (WEF, Geneva) and the Institute for Management Development (IMD, Lausanne). There are also indicators of corruption, bureaucracy and regulations, investment climate, political risks and security risks. Agencies and organizations like the World Bank, IMF, EU and the OECD publish indicators often for a number of specific issues. The indicators and assessment methods of countries are often the basis for empirical economic research, data useful for counseling policy and guide action. For governments evaluation of countries is an important form of information. The advantage is that the indicators reflect complex relationships of world economy. The advantage is at the same time the disadvantage. And this is because they provide only general information. The aim of this article is to evaluate the importance of rating agencies to the configuration of world economy. For this reason, we will study the historical development of rating agencies and the causes of this development. The article also examines the issue of interest conflict and the potential impacts to state economies. Finally, it is examined the impact of rating agencies to international economic crisis.

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    Bibliographic Info

    Article provided by University of Pitesti in its journal Scientific Bulletin - Economic Sciences.

    Volume (Year): 11 (2012)
    Issue (Month): 1 ()
    Pages: 3-15

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    Handle: RePEc:pts:journl:y:2012:i:1:p:3-15

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    Web page: http://www.economic.upit.ro/
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    Related research

    Keywords: Rating Agencies; International Political Economy; International Economic Crisis; Interest Conflict;

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    References

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    1. Richard Cantor & Frank Packer, 1996. "Determinants and impact of sovereign credit ratings," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 37-53.
    2. Reinhart, Carmen, 2002. "Default, currency crises, and sovereign credit ratings," MPRA Paper 13917, University Library of Munich, Germany.
    3. António Afonso & Pedro Gomes & Philipp Rother, 2011. "Short‐ and long‐run determinants of sovereign debt credit ratings," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 16(1), pages 1-15, 01.
    4. Marco Pagano & Paolo Volpin, 2009. "Credit Ratings Failures and Policy Options," EIEF Working Papers Series 0912, Einaudi Institute for Economics and Finance (EIEF), revised Sep 2009.
    5. Loffler, Gunter, 2005. "Avoiding the rating bounce: why rating agencies are slow to react to new information," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 365-381, March.
    6. Reinhart, Carmen & Goldstein, Morris & Kaminsky, Graciela, 2000. "Assessing financial vulnerability, an early warning system for emerging markets: Introduction," MPRA Paper 13629, University Library of Munich, Germany.
    7. Efraim Benmelech & Jennifer Dlugosz, 2009. "The Alchemy of CDO Credit Ratings," NBER Working Papers 14878, National Bureau of Economic Research, Inc.
    8. Bo Becker & Todd Milbourn, 2010. "How did increased competition affect credit ratings?," NBER Working Papers 16404, National Bureau of Economic Research, Inc.
    9. Bo Becker & Todd Milbourn, 2008. "Reputation and competition: evidence from the credit rating industry," Harvard Business School Working Papers 09-051, Harvard Business School, revised Sep 2010.
    10. Lannoo, Karel, 2010. "What reforms for the credit rating industry? A European perspective," ECMI Papers 3805, Centre for European Policy Studies.
    11. Jonathan Katz & Emanuel Salinas & Constantinos Stephanou, 2009. "Credit Rating Agencies," World Bank Other Operational Studies 10227, The World Bank.
    12. António Afonso & Davide Furceri & Pedro Gomes, 2011. "Sovereign credit ratings and financial markets linkages: application to European data," Working Papers Department of Economics 2011/14, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
    13. Alsakka, Rasha & ap Gwilym, Owain, 2013. "Rating agencies’ signals during the European sovereign debt crisis: Market impact and spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 144-162.
    14. Frank Partnoy, 2009. "Overdependence on Credit Ratings Was a Primary Cause of the Crisis," Working Papers 2009.27, Fondazione Eni Enrico Mattei.
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