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The paper shows that investors value the adoption of structural reforms by lending at lower cost. The reform-induced reduction of long-term yields is bigger when reforms are initiated in good times and in countries facing high borrowing costs. Importantly, there is no statistical evidence that markets systematically punish countries that launch reforms concomitantly with fiscal stimulus. The paper also finds that the social context matters: structural reforms lead to a short-lived overshooting of yields when followed by strikes or lockouts. Controlling for endogeneity issues does not reject the central finding of the paper. These results are economically plausible and confirmed even after using sovereign credit ratings as an alternative dependent variable. These results have two main implications: (i) on average, labor market reforms lower borrowing costs; and (ii) country-specific circumstances also play a role.

Labor market --- Manpower policy --- Employment policy --- Human resource development --- Labor market policy --- Manpower utilization --- Labor policy --- Labor supply --- Trade adjustment assistance --- Employees --- Market, Labor --- Supply and demand for labor --- Markets --- Government policy --- Supply and demand --- E-books --- Banks and Banking --- Investments: Bonds --- Labor --- Macroeconomics --- Production and Operations Management --- Financial Markets and the Macroeconomy --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General --- Institutions and the Macroeconomy --- Macroeconomics: Production --- Labor Contracts --- General Financial Markets: General (includes Measurement and Data) --- Financial Crises --- Labour --- income economics --- Investment & securities --- Economic & financial crises & disasters --- Structural reforms --- Output gap --- Employment protection --- Bond yields --- Banking crises --- Macrostructural analysis --- Production --- Financial institutions --- Financial crises --- Economic theory --- Bonds --- United States --- Income economics

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The age-distribution of Europe’s workforce has shifted towards older workers over the past few decades, a process expected to accelerate in the years ahead.. This paper studies the effect of the aging of the workforce on labor productivity, identifies the main transmission channels, and examines what policies might mitigate the effects of aging. We find that workforce aging reduces growth in labor productivity, mainly through its negative effect on TFP growth. Projected workforce aging could reduce TFP growth by an average of 0.2 percentage points every year over the next two decades. A variety of policies could ameliorate this effect.

Aging --- Labor supply --- Industrial productivity --- Productivity, Industrial --- TFP (Total factor productivity) --- Total factor productivity --- Industrial efficiency --- Production (Economic theory) --- Age --- Ageing --- Senescence --- Developmental biology --- Gerontology --- Longevity --- Age factors in disease --- Physiological effect --- E-books --- Labor --- Production and Operations Management --- Demography --- Macroeconomics: Production --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Labor Force and Employment, Size, and Structure --- Demographic Economics: General --- Population & demography --- Macroeconomics --- Labour --- income economics --- Labor force --- Productivity --- Population and demographics --- Population aging --- Labor market --- Population --- Spain --- Income economics

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Foreign holdings of emerging markets (EMs) government bonds have increased substantially over the last decade. While foreign participation in local-currency sovereign bond markets provides an additional source of financing and reduces sovereign yields, it raises concerns about increased sensitivity of yields to shifts in market sentiment. The analysis in this paper suggests that foreign participation and an undiversified investor base transmit global financial shocks to local-currency sovereign bond markets by increasing yield volatility and, beyond a certain threshold, amplify these spillovers. These estimates are robust to a range of econometric techniques including panel smooth threshold regression.

Bond market -- Developing countries. --- Bond market. --- Government securities -- Developing countries. --- Government securities. --- Investment & Speculation --- Finance --- Business & Economics --- Finance: General --- Foreign Exchange --- Investments: Bonds --- Public Finance --- Interest Rates: Determination, Term Structure, and Effects --- Financial Crises --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- Debt --- Debt Management --- Sovereign Debt --- Investment & securities --- Currency --- Foreign exchange --- Public finance & taxation --- Sovereign bonds --- Bond yields --- Securities markets --- Forward exchange rates --- Public debt --- Financial institutions --- Financial markets --- Bonds --- Capital market --- Debts, Public --- United States

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The paper shows that foreign holdings of local currency government bonds in emerging market countries (EMs) have reduced bond yields but have somewhat increased yield volatility in the post-Lehman period. Econometric analyses conducted from a sample of 12 EMs demonstrate that these results are robust and causal. We use an identification strategy exploiting the geography-based measure of EMs financial remoteness vis-à-vis major offshore financial centers as an instrumental variable for the foreign holdings variable.The results also show that, in countries with weak fiscal and external positions, foreign holdings are greatly associated with increased yield volatility. A case study using Poland data elaborates on the cross country findings.

Bonds. --- Housing --- Real estate business. --- Real property --- Real estate companies --- Real estate industry --- Business --- Land use --- Real estate investment --- Dwellings --- Home prices --- House prices --- Housing prices --- Residential real estate --- Bond issues --- Debentures --- Negotiable instruments --- Securities --- Debts, Public --- Stocks --- Prices. --- Ownership. --- Prices --- Banks and Banking --- Finance: General --- Investments: Bonds --- Money and Monetary Policy --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Multiple or Simultaneous Equation Models: Models with Panel Data --- International Finance: General --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Investment & securities --- Finance --- Monetary economics --- Bond yields --- Yield curve --- Sovereign bonds --- Securities markets --- Currencies --- Financial institutions --- Financial services --- Financial markets --- Money --- Bonds --- Interest rates --- Capital market --- Poland, Republic of

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This paper investigates the effects of the adoption of inflation targeting (IT) on the choice of exchange rate regime in emerging markets (EMs), conditional on certain macroeconomic conditions. Using a large sample of EMs and after controlling for the selection bias associated with the adoption of IT, we find that IT countries on average have a relatively more flexible exchange rate regime than other EMs. However, the flexibility of the exchange rate regime shows strong heterogeneity among IT countries depending on their degree of openness and exposure to FX risks. Moreover, we find that the marginal effect of IT adoption on the exchange rate flexibility increases with the duration of the IT regime in place, and with the propensity scores to adopt it.

Foreign Exchange --- Inflation --- Money and Monetary Policy --- Monetary Policy --- Price Level --- Deflation --- Currency --- Foreign exchange --- Monetary economics --- Macroeconomics --- Exchange rate arrangements --- Inflation targeting --- Exchange rate flexibility --- Exchange rates --- Monetary policy --- Prices --- United States