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Andreas Bergh. Photo.

Andreas Bergh

Senior lecturer

Andreas Bergh. Photo.

Trust Us to Repay: Social Trust, Long-Term Interest Rates, and Sovereign Credit Ratings

Author

  • Andreas Bergh
  • Bjørnskov Christian

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

Document type

Journal article

Publisher

Wiley-Blackwell

Topic

  • Economics

Keywords

  • social trust
  • credit ratings

Status

Published

ISBN/ISSN/Other

  • ISSN: 1538-4616