Impact of wage rigidity on sovereign credit rating

Yang, Daecheon and Song, Jeongseok,(2018), Impact of wage rigidity on sovereign credit rating. , Emerging Markets Review, UNSPECIFIED

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Sovereign credit rating is a condensed assessment of a country's ability to repay its public debt in a timely fashion. Downward wage rigidity has been considered as a critical determinant of various macroeconomic and financial phenomena. This study examines the effect of a country's wage rigidity on its sovereign credit rating after measuring downward wage rigidities based on a regime-switching model. The results indicate that greater wage rigidity induces lower sovereign credit rating. We find that wage rigidity amplifies cash flow fluctuations and magnified cash flow volatility negatively affects sovereign credit rating.
Keywords : Wage rigidity, Sovereign credit rating, Regime switching Cash flow volatility, UNSPECIFIED
Journal or Publication Title: Emerging Markets Review
Volume: 34
Item Type: Article
Subjects: Manajemen
Depositing User: Endhar Priyo Utomo
Date Deposited: 30 Dec 2019 03:02
Last Modified: 30 Dec 2019 03:02

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