Higher risk premiums on government debt
- Tom Bernhardsen and Terje Åmås
- Economic Commentaries
In this commentary we examine liquidity and credit premiums in euro-area government securities markets. For countries with a common currency and monetary policy, differences in government bond yields largely reflect different risk premiums across countries. The tendency is that higher government debt, higher government budget deficits, weaker current account balances, lower credit ratings and higher credit premiums have resulted in higher government bond yields in the euro area.
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