Author (Person) | Codogno, Lorenzo |
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Series Title | Economic Policy |
Series Details | No.37, October 2003, p503-532 |
Publication Date | October 2003 |
ISSN | 0266-4658 |
Content Type | Journal | Series | Blog |
Article abstract: We provide evidence that the movements in yield differentials between euro zone government bonds explained by changes in international risk factors - as measured by banking and corporate risk premiums in the United States - are more pronounced for bonds issued by Italy and Spain. Liquidity factors play a smaller role, so policies meant to increase financial market efficiency do not appear sufficient to deliver a 'seamless' bond market in the euro area. The risk of default is a small but important component of yield differentials movements, which signal market perceptions of fiscal vulnerability, impose market discipline on national fiscal policies, and may be reduced only by further convergence in debt ratios. |
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Source Link | Link to Main Source http://www.blackwellpublishing.com |
Subject Categories | Economic and Financial Affairs |
Countries / Regions | Europe |