Andreas Bergh
Senior lecturer
Trust Us to Repay: Social Trust, Long-Term Interest Rates, and Sovereign Credit Ratings
Author
Summary, in English
This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in social trust. We note a number of theoretical mechanisms that suggest that macroeconomic shocks are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates across middle- and high-income countries reveals that interest rates and credit ratings are substantially more sensitive to inflation and growth problems in low-trust countries. This finding sheds light on the differential market reactions to macroeconomic problems in seemingly comparable countries.
Department/s
- Department of Economics
- Centre for Economic Demography
Publishing year
2021-05-06
Language
English
Publication/Series
Journal of Money, Credit and Banking
Volume
53
Issue
5
Links
Document type
Journal article
Publisher
Wiley-Blackwell
Topic
- Economics
Keywords
- social trust
- credit ratings
Status
Published
ISBN/ISSN/Other
- ISSN: 1538-4616