Government Debt Issuance in the Euro Area: The Impact of the Financial Crisis

January 1, 2011

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Format: Chicago

Government Debt Issuance in the Euro Area: The Impact of the Financial Crisis, (USA: International Monetary Fund, 2011) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper documents and analyzes crisis-related changes in government debt issuance practices in the 16 euro zone countries and Denmark. Using a newly constructed database on primary market debt issuance during 2007-09, we find evidence of a shift away from pre-crisis standards of best funding practices competitive auctions of debt instruments with a fixed coupon, long maturity and local currency denomination (DLTF). Exploiting the cross-country panel data dimension of the data, we conclude that the crisis and related changes in the macroeconomic environment and investor sentiment can account for a significant proportion of the deviation. The negative effect of the crisis on DLTF debt issuance was especially pronounced in high deficit and high debt euro area countries, and has forced governments to assume additional risk.

Subject: Currencies, Financial crises, Industrial production, Inflation, Money, Prices, Production, Public debt

Keywords: Currencies, Debt, Debt issuance, Debt stock, Debt variable, Deficit, DLTF debt, Fiscal policy, Foreign currency, Global, Industrial production, Inflation, Investor, Sovereign debt, Sovereign debt management, WP, Yield

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/021
Stock No:

WPIEA2011021
ISBN:

9781455211944
ISSN:

1018-5941

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