Foreign Investor Flows and Sovereign Bond Yields in Advanced Economies /

Asset allocation decisions of international investors are at the core of capital flows. This paper explores the impact of these decisions on long-term government bond yields, using a quarterly investor base dataset for 22 advanced economies over 2004-2012. We find that a one percentage point increas...

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Библиографические подробности
Главный автор: Arslanalp, Serkan
Другие авторы: Poghosyan, Tigran
Формат: Журнал
Язык:English
Опубликовано: Washington, D.C. : International Monetary Fund, 2014.
Серии:IMF Working Papers; Working Paper ; No. 2014/027
Online-ссылка:Full text available on IMF
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245 1 0 |a Foreign Investor Flows and Sovereign Bond Yields in Advanced Economies /  |c Serkan Arslanalp, Tigran Poghosyan. 
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520 3 |a Asset allocation decisions of international investors are at the core of capital flows. This paper explores the impact of these decisions on long-term government bond yields, using a quarterly investor base dataset for 22 advanced economies over 2004-2012. We find that a one percentage point increase in the share of government debt held by foreign investors can explain a 6-10 basis point reduction in long-term sovereign bond yields over the sample period. Accordingly, international flows to core advanced economy bond markets over 2008-12 are estimated to have reduced 10-year government bond yields by 40-65 basis points in Germany, 20-30 basis points in the U.K., and 35-60 basis points in the U.S. In contrast, foreign outflows are estimated to have raised 10-year government bond yields by 40-70 basis points in Italy and 110-180 basis points in Spain during the same period. Our results suggest that the divergence in long-term bond yields between core and periphery economies in the euro area may continue unless the 'normalization' of macroeconomic determinants of bond yields is accompanied by a similar 'normalization' of the foreign investor base. 
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700 1 |a Poghosyan, Tigran. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2014/027 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2014/027/001.2014.issue-027-en.xml  |z IMF e-Library