DP720 Understanding the High Interest Rates on Italian Government Securities
|Author(s):||Alberto Giovannini, Gustavo Piga|
|Publication Date:||October 1992|
|Keyword(s):||Exchange-rate Expectations, Italian Debt, Public Debt, Risk-Premium, Witholding Tax|
|JEL(s):||E42, E43, F34, H63|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=720|
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.