Gap-Filling Government Debt Maturity Choice

Eidam, Frederik

doi:10.2139/ssrn.3178705

Cited by 6 publications

(6 citation statements)

References 42 publications

(36 reference statements)

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“…Badoer and James [ 2 ] established that a gap-filling effect exists owing to the impact of long-term government bonds on long-term bonds of high-credit companies. Eidam [ 41 ] investigated the public debt of Eurozone countries and averred that this gap-filling effect is more significant in government(s) with low financial constraints and high credit. Huang et al [ 4 , 5 ] used corporate data from 69 countries to study public debt and found that public debt squeezes corporate investment by tightening corporate credit constraints.…”

Section: Literature Review and Theoretical Hypothesismentioning

confidence: 99%

Crowding in or crowding out? How local government debt influences corporate innovation for China

Feng

et al. 2021

PLoS ONE

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The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm’s size is small, the firm’s age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt.

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Section: Literature Review and Theoretical Hypothesismentioning

confidence: 99%

Crowding in or crowding out? How local government debt influences corporate innovation for China

Feng

et al. 2021

PLoS ONE

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“…On the other hand, Guibaud et al (2013) show that catering to maturity clienteles is an optimal issuance policy, as a welfare-maximizing government issues longer maturity debt when the fraction of long to short horizon investors increases. Additional evidence suggests that corporations n]and Eurozone governments engage in gap-filling behavior, issuing long-term debt at times when the supply of long-term government debt decreases (Greenwood et al, 2015;Eidam, 2017).…”

Section: Bond Market Segmentationmentioning

confidence: 99%

Much Ado About Nothing: A Study of Differential Pricing and Liquidity of Short and Long Term Bonds

2018

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Are yields of long-maturity bonds distorted by demand pressure of clientele investors, regulatory effects, or default, flight-to-safety or liquidity premiums? Using data on German nominal bonds between 2005 and 2015, we study the differential pricing and liquidity of short and long maturity bonds. We find statistically significant, but economically negligible segmentation in yields and some degree of liquidity segmentation of short-term versus long-term bonds. These results have important policy implications for the e17.5 trillion European pension and insurance industries: long maturity bond yields seem appropriate for the valuation of long-term liabilities.

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“…3 For analyses of euro area public bond markets not considering market access risks see Eidam (2017) or .…”

Section: Introductionmentioning

confidence: 99%

Quantifying Risks to Sovereign Market Access: Methods and Challenges

Erce

Jiang²,

Žigraiová³

2020

SSRN Journal

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In this paper we use data from the euro area to study episodes when sovereigns lose market access. We construct a detailed dataset with potential indicators of market access tensions, and evaluate their ability to forecast episodes when market access is lost, using various econometric approaches. We find that factors associated with high market access tensions are not limited to financial markets, but also encompass developments in global demand, macroeconomic conditions and the fiscal stance. Using the top-performing indicators, we construct a number of market tension indices and use them as single predictors of market access tensions. While such indices are helpful in capturing worsening conditions, they do not yield satisfactory out-of-sample results. On the other hand, using the same top-performing indicators in various multivariate models generates good forecasts of upcoming difficulties in accessing sovereign bond markets. Our results thus point to a trade-off between communicability and accuracy that policymakers face in the search for tools to evaluate risks to market access.

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Gap-Filling Government Debt Maturity Choice

Cited by 6 publications

References 42 publications

Crowding in or crowding out? How local government debt influences corporate innovation for China

Crowding in or crowding out? How local government debt influences corporate innovation for China

Much Ado About Nothing: A Study of Differential Pricing and Liquidity of Short and Long Term Bonds

Quantifying Risks to Sovereign Market Access: Methods and Challenges

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