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(Augusta University) (University of North Texas)
Journal
Center for International Area Studies International Area Studies Review Vol.29 No.3
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    Abstract·Keywords

    Our research studies how Artificial Intelligence (AI) affects sovereign bond ratings. We expect that AI development has positive influences on domestic economic conditions, government effectiveness, and perceptions of government stability, resulting in higher bond ratings. Using sovereign bond ratings of 101 countries from 2020–2023, and including standard explanatory variables and controls for possible endogeneity, we discover that AI development supports higher bond ratings. Additionally, we incorporate robustness checks and use mediation analysis to identify the mechanisms connecting AI development and ratings. Our findings have important implications for understanding how AI development can influence capital costs for economies and governments now and in the future.

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