Zsófia Barta

Whether globalized financial markets place governments in a ‘golden straightjacket’ by making funding conditional on a circumscribed set of policy choices has long been a central debate in International Political Economy. This project delivers evidence to this debate by focusing on a particular set of market constraints on governments: sovereign credit ratings, which crucially influence countries’ access to financing and have been shown to systematically reward and penalize certain policy choices. The project explores whether governments adjust their policies to reap rewards and avoid penalties, or they might push back against the constraints by reshaping the way ratings work. Through quantitative analysis and country case studies, the project studies the impact of ratings on policy choice, while it also explores the only determined (albeit unsuccessful) attempt to-date to reshape the sovereign rating market (in Europe after the global financial crisis) to better understand whether governmental action might be effective in reshaping the constraints ratings exert on policy choice.