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Licensed Unlicensed Requires Authentication Published by De Gruyter June 23, 2023

Government Bond Spreads in the Euro Area

  • Nicolas Carnot EMAIL logo and Stéphanie Pamies
From the journal The Economists’ Voice


In the euro area, the sovereign debts of all Member States aspire to be equally safe but investors persistently discriminate between country debts. Empirically, the evidence suggests a clear role of ‘fundamentals’ in explaining government bond spreads between euro area countries. In particular, the level of indebtedness is found to weigh strongly on spreads in a non-linear fashion. Fiscal factors may however be tempered, or conversely exacerbated, by other factors including the external position, potential growth, and institutional quality. Notwithstanding other pressing policy priorities such as the energy transition and climate change, policy reforms aimed at credibly ensuring sustainable national debts therefore remain central to the governance equilibrium of the euro area.

JEL Classification: E62

Corresponding author: Nicolas Carnot, INSEE, Paris, 75675, France, E-mail:
The views expressed are those of the authors and not necessarily those of the institutions with which they are affiliated.
Received: 2023-05-30
Accepted: 2023-06-02
Published Online: 2023-06-23

© 2023 Walter de Gruyter GmbH, Berlin/Boston

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