THE RELATIONSHIP BETWEEN MACROECONOMIC VARIABLES AND CREDIT RATINGS OF FRAGILE 8

Credit ratings provided by rating agencies have positive and/or negative impacts on international investment decisions. This means that the organizations in question are not objective in rating processes; it even brings about the debate that triggered economic crises. The study investigated the macroeconomic variables of the Fragile Eight group countries and the causality relationship between Moody’s Investors Service Inc.'s credit ratings. Firstly, the cross-sectional dependence was tested with ve tests, and the stability of the series was investigated with CIPS unit root test. The homogeneity of slope coefficients was examined by the Swamy S test and it was found that there was no cointegration relationship between the series as a result of the cointegration test of Westerlund and Edgerton (2007). Finally, the series were subjected to Dumitrescu-Hurlin panel causality test and the existence of a one-way causality relation to foreign direct investment, inflation rate and economic growth rate was found. The presence of the opposite situation could not be determined. In addition, no causal relationship was found between the credit ratings and unemployment rates