Paul Krugman: France's Ideological Downgrade

So Standard & Poor's has downgraded France's credit rating. What does this tell us? The answer is: not much about France. It can't be overemphasized that the ratings agencies have no special information about national solvency — especially for big countries like France. Does S.&P. have inside knowledge of the state of French finances? No. Does it have a better macroeconomic model than, say, the International Monetary Fund? You have to be kidding. So what's this about?

I think it's useful to compare I.M.F. projections for France with those for another country that has been getting nice words from the raters lately: Britain. The charts on this page show data from the World Economic Outlook Database — real numbers through 2012, I.M.F. projections up to 2018. First, real gross domestic product per capita: France has done better than Britain so far, and the I.M.F. expects that advantage to persist.