02087cas a2200253 a 4500 AALejournalIMF017306 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475563108 1018-5941 BD-DhAAL BD-DhAAL Hadzi-Vaskov, Metodij. Does Gross or Net Debt Matter More for Emerging Market Spreads? / Metodij Hadzi-Vaskov, Luca Ricci. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Does gross or net debt matter for long-term sovereign spreads in emerging markets? The topic is important for undestanding the borrowing cost implications of public assetliability management decisions (e.g. using assets to lower debt). We investigate this question using data on emerging market economies (EMEs) over the period 1998-2014. We find that both gross debt and assets have a significant impact on long-term sovereign bond spreads in emerging markets, with effects roughly offsetting each other (coefficients of opposite sign and similar magnitude). Hence, net debt seems more appropriate than gross debt when evaluating the impact of indebtedness on spreads. The empirical results suggest that an increase in net debt by 10 percentage points of GDP implies an increase in the spread by 100-120 basis points, and the effect is larger during periods of domestic distress. The key results from this empirical study are quite robust to alternative specifications and subgroups of EMEs. Mode of access: Internet Ricci, Luca. IMF Working Papers; Working Paper ; No. 2016/246 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/246/001.2016.issue-246-en.xml IMF e-Library