Do Economists’ and Financial Markets’ Perspectives on the New Members of the EU differ?

Author/Editor:

Susan M Schadler ; Pipat Luengnaruemitchai

Publication Date:

March 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In the past several years, the ten new Central and Eastern European members of the European Union have enjoyed rapid growth but frequently alongside growing external imbalances. Economists have pointed to rising vulnerabilities, but markets compressed sovereign bond yields. This paper examines the evidence from the perspective of economists' vulnerability analysis and markets' pricing of sovereign bonds. It finds that spread are lower than can be explained by "fundamentals" and speculates on the causes and permanence of this yield compression.

Series:

Working Paper No. 2007/065

Subject:

Credit ratings Currencies Emerging and frontier financial markets Futures International liquidity

English

Publication Date:

March 1, 2007

ISBN/ISSN:

9781451866292/1018-5941

Stock No:

WPIEA2007065

Pages:

31

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