Rank order analysis of state general obligation bond ratings

Uyar, Bulent; Escarraz, Donald R.

doi:10.1007/bf02920512

Cited by 9 publications

(11 citation statements)

References 3 publications

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“…A number of economic, fiscal, and political variables figure prominently in extant literature on state and local government general purpose credit ratings. Per capita personal income, as a proxy of economic wealth, is significant and generally positive in the literature (Capeci 1991;Uyar and Escarraz 1995;Johnson and Kriz 2005;Marlowe 2007;Krueger and Walker 2008;Jimenez 2011). For example, Palumbo and Zaporowski (2012) argued (and confirmed) that a decline in this measure may reduce the tax base, and as such would be evaluated negatively by credit rating firms.…”

Section: Literature Review: What's In the Rating?mentioning

confidence: 95%

“…Per capita debt outstanding, or sometimes debt size, is a measure of debt burden and is generally found to have and inverse association with credit quality (Farnham and Cluff 1982;Liu and Thakor 1984;Uyar and Escarraz 1995;Grizzle 2010;Palumbo and Zaporowski 2012;Johnson et al 2012). Higher levels of debt burden may signal diminishing ability to repay debt.…”

Section: Literature Review: What's In the Rating?mentioning

confidence: 99%

“…Higher levels of debt burden may signal diminishing ability to repay debt. Related to debt burden, various ratios of debt capacity—ratio of debt outstanding to revenues or expenditures (e.g., Uyar and Escarraz ; Johnson and Kriz ; Jimenez ), or per capita debt to per capita personal incomes (e.g., Liu and Thakor ; Zhao and Guo )—and their associations with credit quality were evaluated in the literature. Decreasing debt servicing capacity, regardless of whether it is measured as a share of total revenues/expenditures or per capita revenues, increases the risk of default risk.…”

Section: Literature Review: What's In the Rating?mentioning

confidence: 99%

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Economic Crises, Economic Structure, and State Credit Quality Through‐the‐Cycle

Moldogaziev¹,

Guzman²

2015

Public Budgeting & Finance

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The study examines "through-the-cycle" stability of S&P and Moody's state credit ratings to national and state level business cycles during 1977-2010. Additionally, the study evaluates the associations between economic concentration and credit quality in a long panel of state credit ratings. The findings suggest that, with other temporal effects held constant, the ratings of S&P and Moody's are not procyclical and are robust to ups and downs in national or state-specific business cycles. Economic concentration is inversely associated with state credit quality and remains significant for the period of an average business cycle, controlling for national and state economic expansions and contractions.

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Section: Literature Review: What's In the Rating?mentioning

confidence: 95%

Section: Literature Review: What's In the Rating?mentioning

confidence: 99%

Section: Literature Review: What's In the Rating?mentioning

confidence: 99%

See 1 more Smart Citation

Economic Crises, Economic Structure, and State Credit Quality Through‐the‐Cycle

Moldogaziev¹,

Guzman²

2015

Public Budgeting & Finance

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“…Though much of the research on state bond ratings focuses on economic factors such as unemployment, revenue, and debt (e.g., Liu and Thakor 1984; Uyar and Escarraz 1995), recent political economy studies have highlighted significant political factors as well. Krueger and Walker (2008) demonstrate how political uncertainty, such as divided government, can lead to lower bond ratings.…”

Section: State Bond Ratings and Term Limitsmentioning

confidence: 99%

Legislative Term Limits and Fiscal Policy Performance

Lewis

2012

Legislative Studies Qtrly

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Do term limits impede the ability of legislators to effectively set fiscal policy? To address this question, I examine state bond ratings from 1996 to 2009. Bond ratings serve as a valuable indicator of a state's fiscal performance, gauging the risk and uncertainty that investors face when buying these bonds. In addition, bond ratings are important policy ends in themselves. High bond ratings make it easier for states to borrow and raise revenue, while lowering interest rates. Results from analyses of "Term-Limitedness" and legislator experience suggest that term limits negatively impact a state's fiscal performance, leading to lower bond ratings.

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“…A number of studies have examined the impact of owngovernment debt (and other factors) on a government's credit rating. These include Liu and Thakor (1984), Feder and Uy (1985), Capeci (1991), Lee (1993), Uyar and Escarraz (1995), Haque et al (1996), Cantor and Packer (1996), Cheung (1996), and Badu and Daniels (1997). One advantage of credit ratings data is that they are readily available.…”

Section: Measures Of Government Creditworthinessmentioning

confidence: 99%

Government debt spillovers and creditworthiness in a federation

Landon¹,

Smith²

2000

Canadian J of Economics

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Estimates are presented for the impact of debt accumulation by the central and subcentral governments of a federation on the creditworthiness of other federation member governments. The estimates, calculated using an ordered probit model and Canadian provincial data, indicate that debt accumulation by the central government has reduced the creditworthiness of indebted provincial governments. Interprovincial debt accumulation effects are negative but relatively small, except for the debt of the largest province, which has a strong positive effect on the creditworthiness of the other provinces. These findings may have implications for other federations and associated jurisdictions, such as the European Union. JEL Classification: H63, F36Les effets de retombée de la dette gouvernementale et la cote de crédit dans une fédération. On calcule l'impact de l'accumulation de la dette par les gouvernements fédéral et subfédéraux dans une fédération sur la cote de crédit des autres gouvernements de la fédération. Ces calibrations, à l'aide d'un modèle probit en utilisant les données provinciales canadiennes, montrent que l'accumulation de la dette par le gouvernement central a réduit la cote de crédit des gouvernements provinciaux endettés. Les effets trans-provinciaux de l'accumulation de la dette sont négatifs mais relativement faibles, sauf dans le cas de la province la plus grande, laquelle a un fort effet sur la cote de crédit des autres provinces. Ces résultats peuvent avoir des implications pour d'autres fédérations comme l'Union Européenne.

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Rank order analysis of state general obligation bond ratings

Cited by 9 publications

References 3 publications

Economic Crises, Economic Structure, and State Credit Quality Through‐the‐Cycle

Economic Crises, Economic Structure, and State Credit Quality Through‐the‐Cycle

Legislative Term Limits and Fiscal Policy Performance

Government debt spillovers and creditworthiness in a federation

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