Authors: Jason O. Jensen
Abstract: This paper examines whether italian bond yield spreads responded to political promises during the crisis months of august to december 2011. It is hypothesized that the potential for a global crisis has made bondholders wary or instigating a creditor run and more likely to wait for a political solution to the crisis. Results suggest governments have considerable capacity to affect bond market movements in the case of systemically important countries facing a sovereign debt crisis.
Keywords: European soverign debt crisis, Bond markets, multilateral crisis resolution