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Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency
The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciati...
Autores principales: | , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Palgrave Macmillan UK
2021
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8436197/ https://www.ncbi.nlm.nih.gov/pubmed/34538974 http://dx.doi.org/10.1057/s41302-021-00201-y |
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author | Bizuneh, Menna Geremew, Menelik |
author_facet | Bizuneh, Menna Geremew, Menelik |
author_sort | Bizuneh, Menna |
collection | PubMed |
description | The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciation, reversal in capital flow, decrease in global demand and significant decline in domestic revenue, leading to a potential increase in sovereign bond risk premiums (SRP). Using dynamic panel estimations and focusing on 12 countries, we find that the Covid-19 pandemic impacts SRP primarily through GDP growth and political stability indicators. In addition, we find the real exchange rate and net export to GDP ratio have a statistically significant impact on sovereign bond risk premium. |
format | Online Article Text |
id | pubmed-8436197 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2021 |
publisher | Palgrave Macmillan UK |
record_format | MEDLINE/PubMed |
spelling | pubmed-84361972021-09-13 Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency Bizuneh, Menna Geremew, Menelik East Econ J Original Article The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciation, reversal in capital flow, decrease in global demand and significant decline in domestic revenue, leading to a potential increase in sovereign bond risk premiums (SRP). Using dynamic panel estimations and focusing on 12 countries, we find that the Covid-19 pandemic impacts SRP primarily through GDP growth and political stability indicators. In addition, we find the real exchange rate and net export to GDP ratio have a statistically significant impact on sovereign bond risk premium. Palgrave Macmillan UK 2021-09-13 2021 /pmc/articles/PMC8436197/ /pubmed/34538974 http://dx.doi.org/10.1057/s41302-021-00201-y Text en © EEA 2021 This article is made available via the PMC Open Access Subset for unrestricted research re-use and secondary analysis in any form or by any means with acknowledgement of the original source. These permissions are granted for the duration of the World Health Organization (WHO) declaration of COVID-19 as a global pandemic. |
spellingShingle | Original Article Bizuneh, Menna Geremew, Menelik Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title | Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title_full | Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title_fullStr | Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title_full_unstemmed | Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title_short | Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies’ (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency |
title_sort | assessing the impact of covid-19 pandemic on emerging market economies’ (emes) sovereign bond risk premium and fiscal solvency |
topic | Original Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8436197/ https://www.ncbi.nlm.nih.gov/pubmed/34538974 http://dx.doi.org/10.1057/s41302-021-00201-y |
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