Authors: Georgios Vousinas

Title: The impact of macroeconomic variables on the government bonds’ yield spread of P.I.I.G.S. An empirical analysis

Abstract

The purpose of this paper is to examine the impact of major macroeconomic variables on the yield spread of government bonds of the so called PIIGS countries i.e. Portugal, Ireland, Iceland, Greece and Spain, which were among the weakest economies in the Eurozone during the recent European debt crisis, caused by the global financial crisis of 2008. An empirical study of the macroeconomic data of the PIIGS for the time period 2007 - 2016 is performed via the Panel Data Analysis statistical method, in order to highlight the relationship between the performance of government bonds and key macroeconomic figures both before and after the burst of the crisis. The results showcase that the main variables affecting government bond yields are inflation, the ratio of the fiscal deficit to GDP and the percentage change in GDP.