Safe-haven flows into the German bond market and the role of policy disagreement

Jana Röder, Peter Tillmann, Peter Winker and Jinyeong Yun

No 239, IMFS Working Paper Series from Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)

Abstract: German government debt is considered a safe asset in times of turbulence. We estimate the impact of changes in the risk appetite of global investors on weekly investment fund flows into the German sovereign bond market. Our key contribution is to allow the impact of such shocks to depend on the extent of disagreement about the path of fiscal policy, which we measure from the texts of all speeches delivered in the German Bundestag. An increase in global risk causes strong inflows into German government bonds if the coalition government is united, but only small and short-lived inflows if disagreement within the government is high. In contrast, disagreement between the government and the opposition has no moderating effect on fund inflows. We also find that the dependence of safe-haven flows on the prevailing level of fiscal disagreement is higher for actively managed funds and for funds domiciled abroad.

Keywords: capital flows; disagreement; policy uncertainty; safe asset; text analysis (search for similar items in EconPapers)
JEL-codes: F41 G15 H30 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-eec and nep-ifn
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:imfswp:340020

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