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Immunity and Infection: Emerging and Developed Market Sovereign Spreads Over the Crisis

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Abstract:

In this study we trace changes in sovereign bond spreads over major phases of the recent international financial crisis for representative sovereign bond portfolios drawn from 43 countries, including 20 emerging economies. We extend upon traditional factor analyses and utilize propensity score matching estimators to select a non-crisis sample for comparison that is more robust to exogenous crisis dating methods. We find no significant changes in the average spreads of local currency denominated emerging market bonds measured over the extended crisis period. In contrast, the spreads of developed markets, USD denominated and peripheral Eurozone sovereign bonds were significantly affected and subjected to financial contagion.

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Global Financial Crisis and Policies

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FuenteSSRN Electronic Journal
Cuartil año de publicaciónNo disponible
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ISSN1556-5068

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