A Test of Government Bond Ratings as a Measure of Political Risk
Political risk analysis benefits from a cross-disciplinary approach. For what we typically regard to be crucial political, economic and social factors often are difficult to measure. At the same time, readily quantified economic indicators and market prices often do not capture the kind of information that is relevant to political risk. Research on financial markets has the potential to bridge the gap and has contributed an important market context to the assessment of political risk.This paper was presented at the 16th International Conference of the International Trade and Finance Association in Lodz, Poland, May 11, 2006.