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Drivers of European public debt management

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  • Wolswijk, Guido

Abstract

This study analyses the choice of government debt managers in the euro area between issuing short‐term or long‐term debt over the period 1992‐2017. Debt managers increased short‐term debt issuance in response to higher interest rate spreads and to rising government debt, notably in vulnerable, high‐debt countries. Thus, lower long-term rates as a result of ECB’s Quantitative Easing (QE) triggered debt managers to focus debt issuance on the long‐term end. Moreover, the usual increase in debt maturity when debt rises ceases to operate when QE is active, possibly because markets perceived it as a backstop to the government bond market. However, limited QE experience calls for caution in interpreting the results. JEL Classification: H63, G12

Suggested Citation

  • Wolswijk, Guido, 2020. "Drivers of European public debt management," Working Paper Series 2437, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20202437
    Note: 339143
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    References listed on IDEAS

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    Cited by:

    1. Plessen-Mátyás, Katharina & Kaufmann, Christoph & von Landesberger, Julian, 2021. "Funding behaviour of debt management offices and the ECB’s public sector purchase programme," Working Paper Series 2552, European Central Bank.

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    More about this item

    Keywords

    debt management; debt maturity; Quantitative Easing; reaction function;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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