Do Credit Markets Discipline Sovereign Borrowers? Evidence from U.S. States

Bayoumi, Tamim; Goldstein, Morris; Woglom, Geoffrey

doi:10.2307/2077788

Cited by 293 publications

(220 citation statements)

References 11 publications

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“…For the U.S., a seminal paper by Goldstein and Woglom (1992) finds evidence that the debt level of U.S. states has a positive impact on their bond yield relative to that of other states. Further evidence in this direction was provided by Bayoumi et al (1995) and Poterba and Rueben (1999). Regarding the fiscal deficit, Laubach (2009) Beber et al (2009) find that liquidity risk is a highly relevant (even the most important) factor in explaining sovereign bond spreads after the introduction of the euro and in times of heightened uncertainty respectively.…”

mentioning

confidence: 84%

What Explains the Surge in Euro Area Sovereign Spreads During the Financial Crisis of 2007–2009?

2011

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confidence: 84%

What Explains the Surge in Euro Area Sovereign Spreads During the Financial Crisis of 2007–2009?

2011

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“…Goldstein and Woglom (1991), Bayoumi, Goldstein and Woglom (1995) and Poterba and Rueben (1997) find that the yield differentials of 39 US states relative to New Jersey depend positively on their levels of debt. Lemmen (1999) uses yields of bonds issued by state governments in Australia, Canada, and Germany and shows that yield spreads over central government bond yields depend positively on the ratio of government debt to GDP.…”

Section: Introductionmentioning

confidence: 99%

Sovereign risk premiums in the European government bond market

Bernoth

Hagen

Schuknecht

2012

Journal of International Money and Finance

390

221

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Abstract:This paper provides a study of bond yield differentials among EU government bonds issued between 1993 and 2005 on the basis of a unique dataset of issue spreads in the US and DM (Euro) bond market. Interest differentials between bonds issued by EU countries and Germany or the USA contain risk premiums which increase with fiscal imbalances and depend negatively on the issuer's relative bond market size. The start of the European Monetary Union has shifted market attention to debt service payments as the key measure of indebtedness and eliminated liquidity premiums in the euro area.

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“…For the U.S., Goldstein and Woglom (1992) in a seminal paper report evidence that the debt level of U.S. states has a positive impact on their bond yield relative to that of other states. Further evidence in this direction was provided by Bayoumi et al (1995) and Poterba and Rueben (1999).…”

Section: Literature Surveymentioning

confidence: 85%

Fiscal variables and bond spreads – evidence from Eastern European countries and Turkey

Nickel

Rother

Ruelke

2011

Applied Financial Economics

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Do Credit Markets Discipline Sovereign Borrowers? Evidence from U.S. States

Cited by 293 publications

References 11 publications

What Explains the Surge in Euro Area Sovereign Spreads During the Financial Crisis of 2007–2009?

What Explains the Surge in Euro Area Sovereign Spreads During the Financial Crisis of 2007–2009?

Sovereign risk premiums in the European government bond market

Fiscal variables and bond spreads – evidence from Eastern European countries and Turkey

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