Article
Structure of the Economy, Financial and Debt Positions, and State Credit Ratings: Evidence from Michigan and the Great Lakes Region
Michigan Journal of Public Affairs
(2012)
Abstract
We examine the effects of sectoral dynamics in the economy, and financial and debt positions on
state credit ratings in Michigan and the Great Lakes region. An in-depth study of Michigan and a
subsequent comparison to other states in the region reveals that an overreliance on a single sector
and/or a sub-sector has negative effects on state credit ratings. For Michigan, however, we find a
positive and significant relationship between auto production and the credit ratings. Poor recent
performance of the auto sector has been a major determinant of Michigan’s current low credit
rating. State financial and debt positions are also found to have significant effects on credit
ratings. Whereas tax and debt burdens demonstrate an inverse relation with credit ratings, a
strong tax base has a positive correlation.
Disciplines
- Finance and
- Public Policy
Publication Date
2012
Citation Information
Tatyana Guzman. "Structure of the Economy, Financial and Debt Positions, and State Credit Ratings: Evidence from Michigan and the Great Lakes Region" Michigan Journal of Public Affairs (2012) Available at: http://works.bepress.com/tatyana_guzman/10/