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Title:

Sovereign debt risk in emerging market economies: Does inflation targeting adoption make any difference? (2017)

Authors:

Hippolyte Wenéyam Balima ; Jean-Louis Combes ; Alexandru Minea

In :

Journal of international money and finance (Vol. 70, February 2017)

Article on page:

pp. 360-377

Languages:

English

Descriptors:

[Eurovoc] ECONOMICS > economic conditions > economic cycle > inflation

[Eurovoc] FINANCE > free movement of capital > financial market

[Eurovoc] FINANCE > public finance and budget policy > public debt

[JEL] E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy

[JEL] E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

[JEL] F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems

[JEL] G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets

[JEL] H - Public Economics > H6- National Budget, Deficit, and Debt > H63 - Dette et gestion de la dette

Tags:

inflation targeting ; sovereign debt ratings ; government bond yield spreads ; emerging markets ; propensity

Abstract:

Based on a sample of 38 emerging economies, we find that inflation targeting (IT) adoption improves sovereign debt risk. Next, we show that this favorable effect is sensitive to several structural characteristics, and to the considered time span. Finally, the measure of sovereign risk (sovereign debt ratings or government bond yield spreads) and the IT form (full-fledged or partial) equally influence the effect of IT adoption on sovereign debt risk. Thus, our paper provides valuable insights regarding IT implementation as a device for improving emerging market economies' access to international financial markets.

Doi :

DOI : 10.1016/j.jimonfin.2016.10.005

http://dx.doi.org/10.1016/j.jimonfin.2016.10.005

Axe de recherche :

Financement du développement

Link for e-copy:

https://halshs.archives-ouvertes.fr/halshs-01426508

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