During the crises of the 1990s, emerging economies usually lacked the policy tools to deal with external shocks that were available to advanced economies. Worldwide turbulent episodes found most emerging economies unable to perform countercyclical policies and, in many cases, their own...

Financial market instability has been the focus of attention of both academic and policy circles. Rating agencies have been under particular scrutiny lately as promoters of financial excesses, upgrading countries in good times and downgrading them in bad times. Using a panel of emerging...