Why do emerging economies borrow short term?

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• dc.contributor.author Broner, Fernando
• dc.contributor.author Lorenzoni, Guido
• dc.contributor.author Schumkler, Sergio L.
• dc.date.accessioned 2019-01-09T09:54:45Z
• dc.date.available 2019-01-09T09:54:45Z
• dc.date.issued 2013
• dc.description.abstract We argue that one reason why emerging economies borrow short term is that it is cheaper than borrowing long term. This is especially the case during crises, as in these episodes the relative cost of long-term borrowing increases. We construct a unique database of sovereign bond prices, returns, and issuances at di¤erent maturities for 11 emerging economies from 1990 to 2009 and present a set of new stylized facts. On average, these countries pay a higher risk premium on long-term than on short-term bonds. During crises, the difference between the two risk premia increases and issuance shifts towards shorter maturities. To illustrate our argument, we present a simple model in which the maturity structure is the outcome of a risk sharing problem between an emerging economy subject to rollover crises and risk averse international investors.en
• dc.description.sponsorship Broner thanks the Spanish Ministry of Science and Innovation, the Generalitat de Catalunya, and the European Research Council (FP7/2007-2013, grant 263846).
• dc.format.mimetype application/pdf
• dc.identifier.citation Broner FA, Lorenzoni G, Schmukler SL. Why do emerging economies borrow short term? J Eur Econ Assoc. 2013 Jan 1;11 Suppl 1:67-100. DOI: 10.1111/j.1542-4774.2012.01094.x
• dc.identifier.doi http://dx.doi.org/10.1111/j.1542-4774.2012.01094.x
• dc.identifier.issn 1542-4766
• dc.identifier.uri http://hdl.handle.net/10230/36227
• dc.language.iso eng
• dc.publisher Wiley
• dc.relation.ispartof Journal of the European Economic Association. 2013 Jan 1;11 Suppl 1:67-100.
• dc.relation.projectID info:eu-repo/grantAgreement/EC/FP7/263846
• dc.rights This is the peer reviewed version of the following article: Broner FA, Lorenzoni G, Schmukler SL. Why do emerging economies borrow short term? J Eur Econ Assoc. 2013 Jan 3;11 Suppl 1:67-100, which has been published in final form at http://dx.doi.org/10.1111/j.1542-4774.2012.01094.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.subject.keyword Emerging markets
• dc.subject.keyword Debt crises
• dc.subject.keyword Investor risk aversion
• dc.subject.keyword Maturity structure
• dc.subject.keyword Risk premium
• dc.subject.keyword Term premium
• dc.title Why do emerging economies borrow short term?
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/acceptedVersion