D53 - General Equilibrium and Disequilibrium: Financial MarketsReturn

Using local projection (LP) method, we assess Credit Default Swap (CDS) changes in the Central-East European countries. Cost-risk optimization in public debt management refers on the fine-tuning the ratio of capital import and foreign currency denominated borrowing to domestic funds. Literature defines closeness centrality as an indicator which highlights the relative importance of an asset within a network, estimated by a quarterly minimum spanning tree graph. We show that CDS changes are driven not only by the foreign exchange shocks but also by foreign currency debt and funding as well as the closeness indicator which signs a network-bias. We also find evidence that relative isolation better describes the Czech sovereign debt market. Thus, this paper makes a new contribution to the debate of public debt funding strategies, while highlighting the importance of network-biases.

Commodity markets are substantial for the shape of the world economy and experienced numerous structural changes over the span of last decades. The financial sector of the economy started to play the commanding role. The prices became more volatile as more and more financial investors began to speculate on commodity markets. Such process combined with other crucial factors leads to market abuses, decreasing transparency of trade and excessive speculation. These issues surged and were mostly observed during the subprime mortgage crisis and in the period straight after it. The policymakers around the globe made an effort in order to diminish those effects and introduced a new policy framework towards commodity markets. This paper focuses on current works and actions taken by the European Union policymakers and their United States counterparts.