Do Economists' and Financial Markets' Perspectives on the New Members of the EU Differ?

33 Pages Posted: 26 Mar 2007

See all articles by Pipat Luengnaruemitchai

Pipat Luengnaruemitchai

International Monetary Fund (IMF)

Susan Schadler

International Monetary Fund (IMF)

Date Written: March 2007

Abstract

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.

JEL Classification: E44, E66, G15

Suggested Citation

Luengnaruemitchai, Pipat and Schadler, Susan, Do Economists' and Financial Markets' Perspectives on the New Members of the EU Differ? (March 2007). IMF Working Paper No. 07/65, Available at SSRN: https://ssrn.com/abstract=976118

Pipat Luengnaruemitchai (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-9733 (Phone)

Susan Schadler

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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