論文

Domestic sovereign bonds have become a growing source of government financing in Emerging Market and Developing Economies (EMDEs). This paper investigates the role of fiscal policies in determining domestic bond yields, and how this relationship varies depending on the debt structure. Specifically, the analysis highlights the interaction of fiscal policy with banking sector leverage and foreign investor holdings for government debt. A 1 percentage point increase in expected primary deficits results in a persistent increase in 10-year domestic bond yield by around 36 basis points over 2.5 years, with larger effects observed during the COVID-19 pandemic. This contrasts with external bond spreads which are more sensitive to external and global risk factors. The greater the reliance on domestic banks for deficit financing, the stronger the impact of loose fiscal policy on domestic bond yields. The shift in domestic debt financing towards domestic banks after the pandemic implies that sovereign yields have been increasingly interlinked with domestic banks’ investment behavior implying potential financial sector risks in major EMDEs.

Escalating uncertainty and policy shifts are reshaping the fiscal outlook. Global public debt projections have been revised upwards, while tariffs, uncertainty and market volatility, increased defense spending, and challenging foreign aid are intensifying risks. Countries must implement gradual fiscal adjustments within credible medium-term frameworks to reduce debt and build buffers against heightened uncertainty. Reforms to major expenditure programs, such as energy subsidies and pensions, are crucial to reducing fiscal vulnerabilities while fostering growth. Stakeholder acceptance is critical for advancing such reforms. Shoring up public support requires strategic design, effective communication, robust safety nets, and trust in governance.

This paper aims to quantify the distributional effects of the United States–People’s Republic of China trade dispute across different regions in Viet Nam. By utilizing detailed firm-level and customs data, the results show that foreign direct investment (FDI) in Viet Nam is geographically concentrated in the northern, central, and southern regions with well-developed road infrastructure. The findings also highlight the important role played by multinational firms from East Asia and the United States in reshaping Viet Nam’s trade flows in the aftermath of the trade dispute. The paper sheds light on the interplay between transport infrastructure, FDI, and international trade.