Anne-Laure Delatte, Alexis Guillaume, 17 July 2020

There was a risk of another euro crisis in Spring 2020. Yet, after a massive sell-off of peripheral bonds, the markets have stabilised. This column analyses the impact of events over the last months on euro area sovereign bond spreads. It finds that differences in healthcare capacity are reflected in bond prices, markets prefer fiscal transfers to loans-based financial assistance programs, and that ECB speeches have stronger effects than deeds during the crisis episode. Of all the euro area members, Italian spreads benefited most from the recent policy interventions.

Cinzia Alcidi, Daniel Gros, 23 May 2019

The relationship between high public debt and low interest rates is once again at the forefront of debate. This column shows that countries with high debt levels pay a risk premium. This creates the potential for self-reinforcing loops of high debt and high risk premia, which can become explosive. 

Lukas Menkhoff, Lucio Sarno, Maik Schmeling, Andreas Schrimpf, 30 June 2016

Determining ‘currency value’ is a century-old topic on which there is little consensus among economists. This column proposes a novel way of adjusting real exchange rates for key country-specific fundamentals to obtain better gauges of currency valuation levels. Adjusting for productivity, export quality, foreign assets, and output gaps is shown to isolate information related to currency risk premia across countries. This can serve as a more precise input into investment and policy decisions.

John Turner , Graeme Acheson , Charles Hickson, Qing Ye, 10 May 2008

Past performance is no guarantee, but history tells us that the equity risk premium has been persistent. This column shows that British investors enjoyed relatively high returns in the nineteenth century, though today’s UK market differs greatly from its formative ancestor.

Events

CEPR Policy Research