The Political Determinants of Government Bond Holdings

Stefan Eichler and Timo Plaga

No 14/2016, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This paper analyzes the link between political factors and sovereign bond holdings of US investors in 60 countries over the 2003-2013 period. We find that, in general, US investors hold more bonds in countries with few political constraints on the government. Moreover, US investors respond to increased uncertainty around major elections by reducing government bond holdings. These effects are particularly significant in democratic regimes and countries with sound institutions, which enable effective implementation of fiscal consolidation measures or economic reforms.

Keywords: government bond portfolio; political factors; Treasury International Capital data; PPML (search for similar items in EconPapers)
JEL-codes: G11 G15 G18 H11 H63 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-pol
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https://www.econstor.eu/bitstream/10419/137588/1/857230506.pdf (application/pdf)

Related works:
Journal Article: The political determinants of government bond holdings (2017)
Working Paper: The Political Determinants of Government Bond Holdings (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:iwh-14-16

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