Abstract
This paper analyses which factors determine the cost of debt, specifically in the light of the deep economic crisis the world is facing today. We evaluate the impact of transparency, financial indicators and sovereign ratings on public debt interest. We consider several measures related to transparency: transparency index, corruption index and public trust in politicians' financial honesty index. We work with 2008 (the beginning of the economic crisis) and 2012 data for OECD and BRICS countries. Our results show that all measures connected with fiscal transparency negatively impact the cost of sovereign debt, increasing therefore the financing costs of the government in 2008. A comparison of 2008 with 2012 reveals a substitution effect. On the one hand, transparency, corruption and public trust indexes explain interest rates in the first year considered. On the other, in 2012, when the crisis started to be overcome, the fiscal situation, rather than transparency indexes, explains interest rates. In the whole time window, sovereign rating holds its explanatory power.