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Rating Agencies: Creating, Amplifying or Drawn by Events in the Sovereign Debt Crisis?

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  • Thomas Url

    (WIFO)

Abstract

Rating agencies transform information on a country's political, economic and financial situation into a summary indicator for investors. Thereby they mainly facilitate cross-border investment. In a number of empirical studies, ratings have been found to have been responsible for a widening of interest rate differentials vis-à-vis a reference country considered as a safe haven. The potential of triggering a vicious circle of interest rate increases and downgrades have put rating agencies into the focus of political interest in the context of the European sovereign debt crisis.

Suggested Citation

  • Thomas Url, 2012. "Rating Agencies: Creating, Amplifying or Drawn by Events in the Sovereign Debt Crisis?," Austrian Economic Quarterly, WIFO, vol. 17(2), pages 108-121, May.
    • Handle: RePEc:wfo:wquart:y:2012:i:2:p:108-121
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    References listed on IDEAS

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    Cited by:

    1. Gunther Tichy, 2012. "The Sovereign Debt Crisis: Causes and Consequences," Austrian Economic Quarterly, WIFO, vol. 17(2), pages 95-107, May.

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    Keywords

    Euro Crisis Ratings Rating Agencies;

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