Understanding the High Interest Rates on Italian Government Securities

Alberto Giovannini and Gustavo Piga

No 720, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper discusses several determinants of the differential between yields on Italian government securities and yields on foreign government securities. We concentrate on expectations of (at least partial) insolvency, tax factors and exchange rate expectations. The evidence suggests that most of the differential between the cost of Italian debt and the cost of foreign (for example, German) debt is due to exchange rate expectations.

Keywords: Exchange-rate Expectations; Italian Debt; Public Debt; Risk-Premium; Witholding Tax (search for similar items in EconPapers)
JEL-codes: E42 E43 F34 H63 (search for similar items in EconPapers)
Date: 1992-10
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Citations: View citations in EconPapers (11)

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