The Fed’s Impact on Government Debt Interest – Impact of the Fed’s Interest Rate Decisions on Hungarian and other Emerging Market Sovereign Bond Yields

Krisztina Füzesi, László György and Gábor Kutasi

Public Finance Quarterly, 2017, vol. 62, issue 4, 524-536

Abstract: Heavily indebted countries – such as Hungary with rapidly accumulating public debt during the 2000s – enjoy significant room for manoeuvre if they can save on their debt rate. On the other hand, the dependence of small, open economies on global economy renders their economic policy vulnerable. It has been observed in numerous areas that when the US “sneezes”, emerging economies “catch a cold”. Using a sample of eleven countries – including Hungary – this paper is intended to test, in a changed global economic environment, the repeatedly validated assumption that the Fed’s federal funds rate has an impact on the government debt rate of emerging economies. We use regression and causality analyses in the context of international interest rate transmission to study the determination. In addition to verifying the presence of interest rate transmission, we also found that the impact is different for different spatial and time horizons and it may even cease to exist in extreme circumstances.

Keywords: Fed; government bond yield; Fed rate; emerging markets (search for similar items in EconPapers)
JEL-codes: E43 E52 F30 F41 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://unipub.lib.uni-corvinus.hu/8759/ (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pfq:journl:v:62:y:2017:i:4:p:524-536

Access Statistics for this article

More articles in Public Finance Quarterly from Corvinus University of Budapest Contact information at EDIRC.
Bibliographic data for series maintained by Adam Hoffmann ().