A1 - Gianluca Cafiso
TI - Public-Debt Financing in the case of External Debt
IS - 2013-37
T3 - Working Papers
KW - External Debt
KW - Auction Redemption Yield
KW - Debt Stabilization
KW - Vector Auto Regression
KW - Regime Switch
N2 - The objective of this paper is to assess whether non-residents’ holdings of a country’s debt make a difference for debt stabilization, where non-residents’ holdings are considered external debt according to a Balance of Payments perspective. The analysis is empirical and considers the case of Italy, one of the world’s largest debt issuer. We detect two possible channels through which external debt might alter the conditions for debt stabilization. Among these, we focus on the Interest Rate Determination in the primary market of Government Bonds. Our results point out the irrelevance of the investors base for debt stabilization.
ER -