The name is absent

Another example can be seen with the new European Union member states Slovakia,
the Czech Republic, Hungary, Slovenia and Poland, which have in general been
upgraded by the three agencies, in some cases more than two notches. The good
macroeconomic performance, especially in Slovakia and the Czech Republic, plays a
major role, but there was also an important credibility effect of joining the European
Union, mostly visible for Moody’s. It is in fact for Moody’s that we observe the
strongest upgrades. For Poland, the effect of the macro performance might be
undervalued. One of the key elements was the sharp reduction of inflation of more then
12 percentage points, but, as we mentioned before, the effect of inflation for high rated
countries is under assessed in the main estimations. If we consider such information,
one would have an estimated additional impact of almost half a notch.

As a final example for the emerging economies, we report the results for five countries
that have, in general also been upgraded: Brazil, Mexico, Malaysia, Thailand and South
Africa. We should briefly highlight that for Brazil the main positive contribution came
from the external area specially the reduction of external debt and the increase in
foreign reserves. This effect is particular to Fitch. For Malaysia and Thailand the main
contribution came from the macro side, while for Mexico and South Africa the
contributions are more balanced.

5. Conclusion

In this paper we studied the determinants of global sovereign debt ratings using ratings
from the three main international rating agencies, for the period 1995-2005. Overall, our
results point to a good performance of the estimated models, across agencies and across
the time dimension, as well as a good overall prediction power.

Regarding the methodological approach, we used both a linear framework and an
ordered probit approach. We modelled the country specific error using a random effects
approach, which in practical terms implied adding time-averages of the explanatory
variables as additional time-invariant regressors. This setting allowed us to distinguish
between immediate and long-run effects of a variable on the sovereign rating level.
Moreover, we also used a limited dependent variable framework by means of an ordered

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