-PDF Download- Emerging Market Local Currency Bond Yields And Foreign Holdings In The Post Lehman Period A Fortune Or Misfortune EBOOK

Emerging Market Local Currency Bond Yields and Foreign Holdings in the Post-Lehman Period - a Fortune or Misfortune?

Author: Mr.Christian Ebeke

Publisher: International Monetary Fund

Published: 2014-02-12

Total Pages: 38

ISBN-13: 1475559283

The paper shows that foreign holdings of local currency government bonds in emerging market countries (EMs) have reduced bond yields but have somewhat increased yield volatility in the post-Lehman period. Econometric analyses conducted from a sample of 12 EMs demonstrate that these results are robust and causal. We use an identification strategy exploiting the geography-based measure of EMs financial remoteness vis-à-vis major offshore financial centers as an instrumental variable for the foreign holdings variable.The results also show that, in countries with weak fiscal and external positions, foreign holdings are greatly associated with increased yield volatility. A case study using Poland data elaborates on the cross country findings.

Emerging Market Local Currency Bond Yields and Foreign Holdings in the Post-Lehman Period - a Fortune or Misfortune?

Author: Mr.Christian Ebeke

Publisher: International Monetary Fund

Published: 2014-02-12

Total Pages: 38

ISBN-13: 1484302850

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Government Financial Assets and Debt Sustainability

Author: Ms.Camila Henao Arbelaez

Publisher: International Monetary Fund

Published: 2017-07-25

Total Pages: 41

ISBN-13: 1484311051

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Do government financial assets help improve public debt sustainability? To answer this question, we assemble a comprehensive dataset on government assets using multiple sources and covering 110 advanced and emerging market economies since the late 1980s. We then use this rich database to estimate the impact of assets on two key dimensions of debt sustainability: borrowing costs and the probability of debt distress. Government financial assets significantly reduce sovereign spreads and the probability of debt crises in emerging economies but not in advanced economies, and the effect varies with asset characteristics, notably liquidity. Government finacial assets also help discriminate countries across the distribution of sovereign spreads, thus signaling information about emerging economies’ creditworthiness.

Spillovers from U.S. Monetary Policy Normalization on Brazil and Mexico’s Sovereign Bond Yields

Author: Carlos Góes

Publisher: International Monetary Fund

Published: 2017-03-10

Total Pages: 39

ISBN-13: 1475586078

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This paper examines the transmission of changes in the U.S. monetary policy to localcurrency sovereign bond yields of Brazil and Mexico. Using vector error-correction models, we find that the U.S. 10-year bond yield was a key driver of long-term yields in these countries, and that Brazilian yields were more sensitive to U.S. shocks than Mexican yields during 2010–13. Remarkably, the propagation of shocks from U.S. long-term yields was amplified by changes in the policy rate in Brazil, but not in Mexico. Our counterfactual analysis suggests that yields in both countries temporarily overshot the values predicted by the model in the aftermath of the Fed’s “tapering” announcement in May 2013. This study suggests that emerging markets will need to contend with potential spillovers from shifts in monetary policy expectations in the U.S., which often lead to higher government bond interest rates and bouts of volatility.

Chile

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2014-07-22

Total Pages: 61

ISBN-13: 1498345107

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This Selected Issues paper on Chile seeks to explain why foreign ownership of locally issued sovereign bonds is so low in Chile and its implications. The low foreign ownership seems to be the result of a combination of macroeconomic, regulatory, and technical factors. The Financial Stability Report discusses the issue, and points to the tax on capital gains, costs for custody of securities and other administrative costs, and the relatively small size of the sovereign bond market as the reasons. Our study also finds that a combination of factors contributed to the low foreign ownership, including a moderate supply of sovereign bonds shadowed by strong local demand, illiquid secondary market, tax and administrative burden, the dominance of inflation-indexed bonds, and inconvenience and potential risks associated with foreign exchange transactions. The small size of the market for nominal bonds, the lack of a liquid secondary market, the previous tax regime and existing administrative burden, and transaction costs in the foreign exchange market seem to be the main reasons.

Research Bulletin, June 2014

Author: International Monetary Fund. Research Dept.

Publisher: International Monetary Fund

Published: 2014-06-09

Total Pages: 14

ISBN-13: 1498320791

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Articles in the June 2014 issue of the IMF Research Bulletin look at “The Rise and Fall of Current Account Deficits in the Euro Area Periphery and the Baltics” (Joong Shik Kang and Jay C. Shambaugh) and “The Two Sides of the Same Coin?: Rebalancing and Inclusive Growth in China” (Il Houng Lee, Murtaza Syed, and Xin Wang). The Q&A looks at “Seven Questions on the Monetary Transmission Mechanism in Low-Income Countries” (Andrew Berg, Luisa Charry, Rafael A. Portillo, and Jan Vleck). This issue of the Research Bulletin includes updated listings of IMF Working Papers, Staff Discussion Notes, and Recommended Readings from the IMF Bookstore. Readers can also find information on free access to a featured article from “IMF Economic Review.”

Is Banks’ Home Bias Good or Bad for Public Debt Sustainability?

Author: Mr.Tamon Asonuma

Publisher: International Monetary Fund

Published: 2015-02-27

Total Pages: 37

ISBN-13: 1498385818

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Motivated by the recent increase in domestic banks’ holdings of domestic sovereign debt (i.e., home bias) in the European periphery, this paper analyzes implications of banks’ home bias for the sovereign’s debt sustainability. The main findings, based on a sample of advanced (AM) and emerging market (EM) economies, suggest that home bias generally reduces the cost of borrowing for AMs and EMs when debt levels are moderate to high. A worsening of market sentiments appears to dimish the favorable impact of home bias on cost of borrowing particularly for EMs. In addition, for AMs and EMs, higher home bias is associated with higher debt levels, and less responsive fiscal policy. The findings suggest that home bias indeed matters for debt sustainability: Home bias may provide fiscal breathing space, but delays in fiscal consolidation may actually delay problems until debt reaches dangerously high levels.

Republic of Poland

Author: International Monetary Fund. European Dept.

Publisher: International Monetary Fund

Published: 2014-06-26

Total Pages: 102

ISBN-13: 1498367860

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This Selected Issues paper considers the case of Poland to analyze global financial spillovers to emerging market (EM) sovereign bond markets. Foreign holdings of Polish government bonds have increased substantially over the last decade. Although foreign participation in local-currency sovereign bond markets provides an additional source of financing and reduces sovereign yields, it has also given rise to concerns about increased sensitivity to shifts in market sentiment. The analysis in this paper suggests that foreign participation plays an important role in transmitting global financial shocks to local-currency sovereign bond markets by increasing yield volatility and, beyond a certain threshold, amplifying these spillovers.

Uruguay

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2015-03-27

Total Pages: 30

ISBN-13: 1484304403

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This Selected Issues paper reviews Uruguay’s experience with inclusive growth over the last two decades, and identifies challenges and policy options to promote greater equality going forward. Uruguay has a long history of high living standards comparable to many developed countries, and has made further progress in improving social conditions since 2005 on the back of strong economic growth and active social policies. Looking ahead, preserving macroeconomic stability is essential to sustain these gains. For the longer term, improving access to quality education will be the key to enhance social mobility.

Playing with Fire

Author: Yılmaz Akyüz

Publisher: Oxford University Press

Published: 2017

Total Pages: 279

ISBN-13: 0198797176

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Many emerging and developing economies (EDEs) have liberalised their capital accounts, allowing greater freedom for international lenders and investors to enter their markets. This volume provides an empirical account of deeper integration of EDEs into the global financial system and discusses its implications for stability and growth.