Working Papers in Economics,
University of Bergen, Department of Economics

Abstract: Identifying the costs and benefits of domestic debt is necessary to understand the trade-offs between external and domestic debt. However, this is not an easy task, due to the lack of highquality data. In this paper, I introduce a new detailed dataset on domestic bond markets in 19 emerging economies for the period 1995–2012. The dataset contains public and publicly guaranteed bonds as well as private sector bonds. This enables me to empirically analyze the crowding-out effect of public bonds on private sector bonds. The results are more supportive of crowding in, as well-developed bonds markets and investment-grade firms enjoy more positive spillover effects. Bonds issued by high-risk firms will be crowded out when public issuances increase, while it appears that the effects cancel each other out in small bonds markets.

Keywords: domestic bond markets; crowding–out effect; crowding–in effect; emerging markets

JEL-codes: G38; H63

54 pages, September 29, 2017

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