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Economic Freedom And State Bond Ratings

Author

Listed:
  • Ariel R. Belasen
  • Rik W. Hafer
  • Shrikant P. Jategaonkar

Abstract

type="main" xml:id="coep12098-abs-0001"> Are state bond ratings, ceteris paribus, related to economic freedom? We test for the relationship between economic freedom and an aggregate index comprised of ratings by Standard & Poor, Moody's, and Fitch. We also test for a relationship between economic freedom and the ratings by these three agencies individually. With a sample covering all 50 states for the period 1995–2008, the evidence strongly indicates that state bond ratings are positively and significantly related to overall economic freedom as well as three sub-categories of economic freedom. Our results show that the quantitative impact of economic freedom on bond ratings is comparable to the effect of state real income and the unemployment rate . ( JEL E43, H71)

Suggested Citation

  • Ariel R. Belasen & Rik W. Hafer & Shrikant P. Jategaonkar, 2015. "Economic Freedom And State Bond Ratings," Contemporary Economic Policy, Western Economic Association International, vol. 33(4), pages 668-677, October.
  • Handle: RePEc:bla:coecpo:v:33:y:2015:i:4:p:668-677
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    File URL: http://hdl.handle.net/10.1111/coep.2015.33.issue-4
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    Citations

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    Cited by:

    1. John A. Dove, 2017. "Judicial Independence and US State Bond Ratings: An Empirical Investigation," Public Budgeting & Finance, Wiley Blackwell, vol. 37(3), pages 24-46, September.
    2. John A. Dove & Courtney A. Collins & Daniel J. Smith, 2018. "The impact of public pension board of trustee composition on state bond ratings," Economics of Governance, Springer, vol. 19(1), pages 51-73, February.
    3. Keith Barnatchez & Robert Lester, 2017. "The Relationship Between Economic Freedom And Economic Dynamism," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 358-372, April.

    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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