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Economic complexity and sovereign risk premia

Author

Listed:
  • M. Utku Özmen

    () (Central Bank of the Republic of Turkey)

Abstract

This paper analyses the impact of economic complexity, measured by the Economic Complexity Index (ECI), on sovereign risk premia. The results reveal that, after controlling for relevant macroeconomic variables, global factors and institutional indicators, economic complexity has a significantly negative impact on sovereign risk premia, captured by sovereign CDS spreads. This finding is valid both for advanced and emerging economies. An economy's ability to produce complex goods, which requires bringing in different sorts of know-how and capabilities together, might serve as an indicator of economy's resilience to shocks and thus, helps reduce the country risk.

Suggested Citation

  • M. Utku Özmen, 2019. "Economic complexity and sovereign risk premia," Economics Bulletin, AccessEcon, vol. 39(3), pages 1714-1726.
  • Handle: RePEc:ebl:ecbull:eb-18-00975
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I3-P162.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    economic complexity; ECI; risk premia; CDS spreads; emerging economies;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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