Can Credit Rating Agencies Affect Election Outcomes?

Igor Cunha
University of Kentucky

Miguel Ferreira
Nova School of Business and Economics

Rui Silva
London Business School

We show that credit rating agencies can have a significant effect on election outcomes. We identify these effects by exploiting exogenous variation in municipal bond ratings due to Moody’s recalibration of its scale in 2010. We find that incumbent politicians in upgraded municipalities experience an increase in their likelihood of reelection and their vote shares.


Published: January, 2019

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