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Drivers of European public debt management

Guido Wolswijk ()

No 2437, Working Paper Series from European Central Bank

Abstract: This study analyses the choice of government debt managers in the euro area between issuing short‐term or long‐term debt over the period 1992‐2017. Debt managers increased short‐term debt issuance in response to higher interest rate spreads and to rising government debt, notably in vulnerable, high‐debt countries. Thus, lower long-term rates as a result of ECB’s Quantitative Easing (QE) triggered debt managers to focus debt issuance on the long‐term end. Moreover, the usual increase in debt maturity when debt rises ceases to operate when QE is active, possibly because markets perceived it as a backstop to the government bond market. However, limited QE experience calls for caution in interpreting the results. JEL Classification: H63, G12

Keywords: debt management; debt maturity; Quantitative Easing; reaction function (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-cba and nep-eec
Note: 339143
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Handle: RePEc:ecb:ecbwps:20202437