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

Stijn Claessens (), Sergio Schmukler and Daniela Klingebiel

No 3789, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Government debt; Government bond markets; Sovereign bonds; Foreign currency debt; Currency structure (search for similar items in EconPapers)
JEL-codes: F21 F33 F34 F36 G15 G18 (search for similar items in EconPapers)
Date: 2003-02
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (62)

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Working Paper: Government bonds in domestic and foreign currency: the role of macroeconomic and institutional factors (2003)
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