Germany’s tight fiscal policy may hamper ECB normalisation – IMF research
Sustained budget surpluses have reduced debt issuance and contributed to ever-lower yields
The tight fiscal policy of the German government could obstruct future ECB monetary policy normalisation, says research published by the International Monetary Fund (IMF).
In German bond yields and debt supply: Is there a “Bund premium”?, Anne-Charlotte Paret and Anke Weber study the evolution of Germany’s sovereign debt market in the wake of the financial crisis.
“We document a rise in the ‘Bund premium’ in the post-crisis period,” say the authors. “Bunds are now earning a significant
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