Anmerkungen:
In: IFN Working Paper No. 1039
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 1, 2014 erstellt
Beschreibung:
This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in informal institutions, measured by social trust. We note a number of theoretical mechanisms that could imply that similar objective problems are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates across middle and high-income countries reveal that interest rates and ratings are substantially more sensitive to inflation and growth problems in low-trust countries. This finding sheds light on the differential market reactions to economic problems in seemingly comparable countries