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ResearchPaper
2009

International interest-rate risk premia in affine term structure models

Abstract (English)

I estimate a Gaussian two-factor affine term structure model of bond yields for three countries, the United States, the United Kingdom and Germany. I find a considerable time-varying component of excess returns in the data. They are positively correlated with the slope of the term structure and negatively with the short-term policy rate. In addition, the panel clearly indicates to co-movements in the same directions on an international level. When testing the estimated model for the expectations puzzle of the the term structure, at least at one end of the yield curve, this puzzle can be resolved when applying risk-adjusted yield changes.

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Publication series

Hohenheimer Diskussionsbeiträge; 316

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Faculty
Faculty of Business, Economics and Social Sciences
Institute
Institut für Volkswirtschaftslehre (bis 2010)

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Language
English

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Classification (DDC)
330 Economics

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BibTeX

@techreport{Geiger2009, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/5273}, author = {Geiger, Felix}, title = {International interest-rate risk premia in affine term structure models}, year = {2009}, school = {Universität Hohenheim}, series = {Hohenheimer Diskussionsbeiträge}, }