**Table 3.2. Implications of public investment quality for sovereign risk, baseline results**

||**1**|**2**|**3**|**4**|**5**|**6**|**7**|**8**|**9**|**10**|
|---|---|---|---|---|---|---|---|---|---|---|
||**CDS**<br>**spread**|**Sov.**<br>**rating**|**CDS**<br>**spread**|**Sov.**<br>**rating**|**CDS**<br>**spread**|**Sov.**<br>**rating**|**CDS**<br>**spread**|**Sov.**<br>**rating**|**CDS**<br>**spread**|**Sov.**<br>**rating**|
|Publicinvestment (share ofGDP)|-3.502**|-9.094|-0.298|-15.747**|-3.230**|-1.516|-2.172|-1.646|-4.074**|<br>-10.230|
||(1.312)|(5.837)|(2.076)|(7.795)|(1.488)|(4.073)|(2.319)|(4.228)|(1.860)|(7.366)|
|PIQ-F|-2.243***|-4.873***|||-2.135**|-4.089***|-2.223**|-3.806***|-1.325**|-3.150**|
||(0.458)|(1.342)|||(0.887)|(1.142)|(0.960)|(1.306)|(0.604)|(1.281)|
|PIQ-F × Publicinvestment (share ofGDP)|-41.380***|-101.536***|||-35.411***|<br>-61.697**|<br>-44.724**|<br>-65.726**|||
||(6.477)|(36.239)|||(9.612)|(28.476)|(18.226)|(28.139)|||
|PIQ-D|||-1.628**|-1.896**|||||||
||||(0.770)|(0.875)|||||||
|PIQ-D × Publicinvestment (share ofGDP)|||-34.653*|-56.456***|||||||
||||(18.180)|(19.565)|||||||
|General government gross debt, percent of GDP|0.009***|0.030***|0.009***|0.027**|0.009***|0.035***|0.013***|0.032***|0.010***|0.029***|
||(0.002)|(0.009)|(0.003)|(0.012)|(0.003)|(0.008)|(0.004)|(0.007)|(0.002)|(0.008)|
|Total reserves(percent of GDP)|-0.004<br>|<br>-0.018<br>|<br>-0.002<br>|<br>-0.006<br>|<br>-0.003<br>|<br>-0.001<br>|<br>-0.008<br>|<br>-0.003<br>|-0.006<br>|<br>-0.024<br>|
||(0.004)|(0.015)|(0.005)|(0.016)|(0.005)|(0.014)|(0.006)|(0.015)|(0.004)|(0.017)|
|Exchange rate(LCUper USD),log|-0.035|0.016|-0.027|-0.072|-0.029|0.039|-0.019|0.034|-0.029|-0.003|
||(0.023)|(0.084)|(0.030)|(0.091)|(0.022)|(0.075)|(0.027)|(0.073)|(0.026)|(0.085)|
|Inflation, consumer prices (percent)|0.042***|0.082***|0.062***|0.041|0.040**|0.047**|0.062***|0.047**|0.040***|<br>0.078***|
||(0.013)|(0.018)|(0.017)|(0.036)|(0.018)|(0.018)|(0.021)|(0.020)|(0.014)|(0.019)|
|Real GDP growth (percent)|-0.029*|-0.051|-0.039**|-0.131***|<br>-0.017|-0.037|-0.019|-0.029|-0.029*|-0.056|
||(0.015)|(0.035)|(0.016)|(0.045)|(0.018)|(0.035)|(0.024)|(0.036)|(0.015)|(0.037)|
|Real GDP per capita, log|-0.661***|-2.173***|-0.409*|-2.438***|<br>-0.583**|-1.605***|<br>-0.544**|-1.479***|<br>-0.597***|-2.047***|
||(0.191)|(0.305)|(0.220)|(0.340)|(0.247)|(0.373)|(0.220)|(0.401)|(0.193)|(0.317)|
|Current account balance (percent of GDP)|-0.007<br>|-0.062**<br>|-0.029**<br>|-0.084**<br>|-0.019<br>|-0.059***<br>|<br>-0.030*<br>|-0.058**<br>|-0.001<br>|-0.057**<br>|
||(0.010)|(0.024)|(0.013)|(0.036)|(0.015)|(0.017)|(0.017)|(0.024)|(0.011)|(0.024)|
|Systemic bankingcrisis DV|1.004***|0.606|1.072*|1.123|1.582***|1.574*|1.359***|1.511*|0.923***|<br>0.476|
||(0.317)|(0.671)|(0.563)|(0.817)|(0.334)|(0.804)|(0.398)|(0.764)|(0.291)|(0.630)|
|Currencycrisis DV|0.269|0.292|0.158|-0.074|0.187|0.126|0.080|0.347|0.150|<br>0.043|
||(0.193)|(0.407)|(0.259)|(0.366)|(0.179)|(0.409)|(0.224)|(0.411)|(0.174)|(0.451)|
|Debt crisis DV|1.090|3.395**|1.640|3.478|1.573|3.278***|0.587|2.065**|1.041|3.715**|
||(0.785)|(1.305)|(1.055)|(2.105)|(1.056)|(0.987)|(1.283)|(0.946)|(0.776)|(1.441)|
|Debt restructuring DV|1.016***|2.079*||1.468|0.899**|1.621**|0.807**|1.674**|0.950***|<br>2.183*|
||(0.340)|(1.075)||(2.346)|(0.343)|(0.802)|(0.383)|(0.681)|(0.343)|(1.219)|
|Domestic credit to private sector, percent of GDP|||||-0.004|-0.037***|<br>-0.003|-0.044***|||
||||||(0.002)|(0.009)|(0.004)|(0.007)|||
|Total natural resources rents (percent of GDP)|||||0.001<br>|-0.009<br>|0.010<br>|-0.010<br>|||
||||||(0.010)|(0.020)|(0.018)|(0.022)|||
|Real net ODA received,log|||||<br>-0.056|<br>-0.361*|<br>-0.054|<br>-0.118|||
||||||(0.069)|(0.204)|(0.073)|(0.202)|||
|Chinn-Ito KA index|||||||-0.001|0.022|||
||||||||(0.070)|(0.115)|||
|Trade (percent of GDP)|||||||0.003|0.020***|||
||||||||(0.004)|(0.006)|||
|FDI, net inflows (percent of GDP)|||||||<br>-0.007|<br>-0.051**|||
||||||||(0.026)|(0.024)|||
|Constant|10.485***|28.481***|8.357***|31.289***|<br>11.152***|<br>32.576***|<br>10.244***|<br>25.868***|<br>9.971***|27.689***|
||(1.745)|(2.503)|(2.019)|(2.766)|(3.237)|(6.029)|(2.908)|(6.642)|(1.744)|(2.539)|
|Year FE|yes|yes|yes|yes|yes|yes|yes|yes|yes|yes|
|Observations|508|1,072|225|490|373|925|331|861|508|1,072|
|Adj. R-sq|0.556|0.538|0.590|0.572|0.567|0.607|0.587|0.660|0.530|0.515|

_Source:_ Authors’ estimations.

_Note:_ *, **, *** indicate statistical significance at the 10, 5, and 1 percent levels, respectively. Country-level clustered standard errors are in parentheses.

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