The paper evaluates the impact of announcements of Covid-19 related monetary and fiscal policy measures by the European Central Bank and the European Commission.
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We find that the announcements predominantly affect the government bond yields of more solvent countries such as Germany and the Netherlands.
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This finding mainly holds for the announcements of fiscal measures.
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We conclude that the investors are primarily concerned about the future fiscal burden that has to be shouldered by those solvent countries within the euro area.
Abstract
This paper evaluates the impact of announcements of Covid-19 related monetary and fiscal policy measures by the European Central Bank and the European Commission. Applying an event study, we find that the announcements predominantly affect the government bond yields of more solvent countries such as Germany and the Netherlands. Since this finding mainly holds for the announcements of fiscal measures, we conclude that the investors are primarily concerned about the future fiscal burden that has to be shouldered by those solvent countries within the euro area.
Keywords
ECB
European Commission
Event study
Covid-19
Sovereign yields
JEL classification
E44
E58
E62
G14
Cited by (0)
The paper contains original research and has not been submitted and published elsewhere.
This paper represents the authors’ personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank or the Eurosystem.
