Sub-National Government’s Risk Premia Does Fiscal Performance Matter by Sola, Sergio.

Full Title: Sub-National Government’s Risk Premia Does Fiscal Performance Matter
Author/Editor(s): Sergio Sola; Geremia Palomba
ISBN: 1513511068, 9781513511061
Publisher: International Monetary Fund
Published Place: Washington, D.C.
Published/Copyright Year: 2015
Language: 0
Series: IMF Working Papers: Working Paper No. 15/117
IMF ELibrary
Number of pages: 1 online resource (39 pages)
Categories:
Asset Pricing
Bonds
Budget Deficits
Financial Markets And The Macroeconomy
Fiscal Performance
Fiscal Policy
General
Government Debt
Interest Rates
Public Expenditures, Investment, And Finance
Risk Premium
Sovereign Risk
Sub-National Governments
Taxation


Content:
This paper examines the determinants of sub-national governments risk premia using secondary market data for U.S., Canada, Australia and Germany. It finds that, as for central governments, fiscal fundamentals matter in the pricing of risk premia, and sub-national governments with higher public debt and larger deficits pay higher premia. However, this relationship is not uniform across countries. Market pricing mechanisms are less effective in presence of explicit or implicit guarantees from the central government. Specifically, we show that in pricing risk premia of sub-national governments, markets are less responsive to fiscal fundamental when sub-national governments depend on high transfers from the central government, i.e., when there is some form of implicit guarantee from the center. Using primary market data, the paper also looks at whether transfer dependency from the central government influences sub-national governments’ incentive to access markets. We show that high transfer dependency lowers the probability of sub-national governments to borrow on capital markets.

Electronic Resources:
http://hdl.library.upenn.edu/1017.12/1522374

ISBNPlus ID: UPE.BD102.22104-11-2209144
Form: Nonfiction
Released Date: 20151203

Download BiBTeX of this book (.bib)
@book{isbnplus9781513511061,
 title={Sub-National Government’s Risk Premia Does Fiscal Performance Matter},
 author={Sergio Sola and Geremia Palomba},
 isbn={9781513511061},
 series={IMF Working Papers: Working Paper No. 15/117},
 url={http://isbnplus.org/9781513511061},
 year={2015},
 publisher={International Monetary Fund},
 address={Washington, D.C.}
}
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%0 Book
%T Sub-National Government’s Risk Premia Does Fiscal Performance Matter
%A Sergio Sola
%A Geremia Palomba
%@ 9781513511061
%U http://isbnplus.org/9781513511061
%D 2015
%I International Monetary Fund
%C Washington, D.C.
Download 9781513511061.enw
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TY  - BOOK
T1  - Sub-National Government’s Risk Premia Does Fiscal Performance Matter
A1  - Sergio Sola
A1  - Geremia Palomba
SN  - 9781513511061
T3  - IMF Working Papers: Working Paper No. 15/117
UR  - http://isbnplus.org/9781513511061
Y1  - 2015
PB  - International Monetary Fund
CY  - Washington, D.C.
ER  - 
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APA Style:
Sola, S. & Palomba, G. (2015). Sub-National Government’s Risk Premia Does Fiscal Performance Matter. Washington, D.C.: International Monetary Fund.

MLA Style:
Sola, Sergio, and Geremia Palomba. Sub-National Government’s Risk Premia Does Fiscal Performance Matter. Washington, D.C.: International Monetary Fund, 2015. Print.

Chicago Style:
Sola, Sergio, and Geremia Palomba. Sub-National Government’s Risk Premia Does Fiscal Performance Matter. Washington, D.C.: International Monetary Fund, 2015.