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Government Bonds in Domestic and Foreign Currency: The Role of Macroeconomic and Institutional Factors
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Government Bonds in Domestic and Foreign Currency: The Role of Macroeconomic and Institutional Factors

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  • Claessens, Stijn
  • Schmukler, Sergio
  • Klingebiel, Daniela

Abstract

The development of government bond markets and, in particular, their currency composition have recently received much interest, partly because of their relation with financial crises. This Paper studies determinants of the size and currency composition of government bond markets for a panel of developed and developing countries. We find that countries with larger economies, greater domestic investor bases and more flexible exchange rate regimes have larger domestic currency bond markets, while smaller economies rely more on foreign currency bonds. Better institutional frameworks and macroeconomic fundamentals enhance both domestic currency bond markets and increase countries? ability to issue foreign currency bonds, while they raise the share of foreign exchange bonds.

Suggested Citation

  • Claessens, Stijn & Schmukler, Sergio & Klingebiel, Daniela, 2003. "Government Bonds in Domestic and Foreign Currency: The Role of Macroeconomic and Institutional Factors," CEPR Discussion Papers 3789, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3789
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    More about this item

    Keywords

    Government debt; Government bond markets; Sovereign bonds; Foreign currency debt; Currency structure;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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