Sovereign Debt Risk in Emerging Countries: Does Inflation Targeting Adoption Make Any Difference?

Alexandru Minea, Jean-Louis Combes and Hippolyte Balima

No 201504, Working Papers from CERDI

Abstract: Based on a sample of 38 emerging countries, we find that inflation targeting (IT) adoption improves sovereign debt risk. However, we show that IT adoption effectiveness is sensitive to several structural characteristics, such as the phase of the business cycle, the fiscal stance, and the level of development. In addition, the measure of the risk, namely ratings (rating agencies) or bond yield spreads (markets), as well as the form of IT (full-fledged or partial) is equally crucial for the effects of IT adoption on sovereign debt risk. Thus, our paper provides valuable insights for IT implementation as a device for improving emerging market economies’ access to international financial markets for financing long-term investment projects and supporting potential economic growth.

Keywords: Inflation targeting; Sovereign debt ratings; Government bond yield spreads, Emerging markets; Propensity scores matching (search for similar items in EconPapers)
JEL-codes: E44 E58 F34 G15 H63 (search for similar items in EconPapers)
Pages: 41
Date: 2015-02
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://publi.cerdi.org/ed/2015/2015.04.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to publi.cerdi.org:80 (No such host is known. )

Related works:
Working Paper: Sovereign Debt Risk in Emerging Countries: Does Inflation Targeting Adoption Make Any Difference? (2015)
Working Paper: Sovereign Debt Risk in Emerging Countries: Does Inflation Targeting Adoption Make Any Difference? (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:1658

Access Statistics for this paper

More papers in Working Papers from CERDI Contact information at EDIRC.
Bibliographic data for series maintained by Vincent Mazenod ().