{"title":"Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies' (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency.","authors":"Menna Bizuneh, Menelik Geremew","doi":"10.1057/s41302-021-00201-y","DOIUrl":null,"url":null,"abstract":"<p><p>The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciation, reversal in capital flow, decrease in global demand and significant decline in domestic revenue, leading to a potential increase in sovereign bond risk premiums (SRP). Using dynamic panel estimations and focusing on 12 countries, we find that the Covid-19 pandemic impacts SRP primarily through GDP growth and political stability indicators. In addition, we find the real exchange rate and net export to GDP ratio have a statistically significant impact on sovereign bond risk premium.</p>","PeriodicalId":45363,"journal":{"name":"Eastern Economic Journal","volume":"47 4","pages":"519-545"},"PeriodicalIF":1.1000,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8436197/pdf/","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Eastern Economic Journal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1057/s41302-021-00201-y","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2021/9/13 0:00:00","PubModel":"Epub","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciation, reversal in capital flow, decrease in global demand and significant decline in domestic revenue, leading to a potential increase in sovereign bond risk premiums (SRP). Using dynamic panel estimations and focusing on 12 countries, we find that the Covid-19 pandemic impacts SRP primarily through GDP growth and political stability indicators. In addition, we find the real exchange rate and net export to GDP ratio have a statistically significant impact on sovereign bond risk premium.
期刊介绍：
The Eastern Economic Journal, a quarterly publication of the Eastern Economic Association, was established in 1973. The EEJ publishes papers written from every perspective, in all areas of economics and is committed to free and open intellectual inquiry from diverse philosophical perspectives. It welcomes manuscripts that are methodological and philosophical as well as empirical and theoretical. Readability and general interest are major factors in publication decision.
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