Abstract
The authors of this article propose a classroom simulation designed for advanced economics or finance courses whereby student teams role-play Moody’s sovereign credit risk analysts. Despite the importance of sovereign credit risk ratings in affecting the funding liquidity of countries, the process generating ratings is a black box. The authors use active and experiential learning techniques to guide student teams in mimicking the process used by Moody’s analysts to assign a sovereign credit risk rating to one of 12 diverse countries. An accompanying YouTube video guides students in navigating three Web sites to retrieve macroeconomic data informing sovereign credit risk ratings. The simulation may be utilized in face-to-face and synchronous online environments.
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