And oftentimes, hip replacement surgery is performed to remove

The chapter then employs a Structural Vector Autoregression (SVAR) model to show empirically how the spread of sovereign debt is influenced over time by the factors given above. The empirical results show that most of the variations in sovereign spreads are caused by global shocks such as the term structure of US interest rates and the global risk aversion. The findings also indicate that shocks from the US have a direct effect on sovereign spread and an indirect effect via country specific macroeconomic fundamentals.

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