Global Spillovers into Domestic Bond Markets in Emerging Market Economies
International Monetary Fund
Download Document| Date Published | 2013 |
| Version | |
| Primary Author | Laura Jaramillo |
| Other Authors | Anke Weber |
| Theme | Housing Finance and the Economy |
| Country |
Abstract
While fiscal conditions remain healthier than in advanced economies, emerging economies continue to be exposed to negative spillovers if global conditions were to become less favorable. This paper finds that domestic bond yields in emerging economies are heavily influenced by two international factors: global risk appetite and global liquidity. Using a novel approach, the analysis goes on to show that the vulnerability of emerging economies to these factors is not uniform but rather depends on country specific characteristics, namely fiscal fundamentals, financial sector openness and the external current account balance.