MACROECONOMICS AND SOVEREIGN RISK RATINGS

The objective of this paper is to analyze the concept and determinants of "sovereign risk" and the role of the credit risk rating agencies which serve internationally as the main reference instruments employed by economic agents to assess this risk. The paper also tries to identify macroeconomic variables which could be associated with sovereign risk ratings awarded by rating agencies to each country. After examining the indicators on an individual basis, their potential as a group is tested econometrically as a determinant of the class of sovereign risk into which national economies fall. Our results constitute a set of indicators which emerging economies would be well advised to improve upon.