The Utilization of Sovereign Bond Spreads: The Case of V4 Countries
The Utilization of Sovereign Bond Spreads: The Case of V4 Countries

Author(s): Jana Hvozdenská, Petr Červinek
Subject(s): National Economy, Supranational / Global Economy, Evaluation research, Economic development
Published by: Masarykova univerzita nakladatelství
Keywords: GDP prediction; yield curve; slope; spread;
Summary/Abstract: The yield curve – specifically the spread between long term and short term interest rates is a valuable forecasting tool. It is simple to use and significantly outperforms other financial and macroeconomic indicators in predicting recessions two to six quarters ahead. The steepness of the yield curve should be an excellent indicator of apossible future economic activity. A rise in the short rate tends to flatten the yield curve as well as to slow real growth the near term. This paper aims to analyze the dependence between slope of the yield curve and an economic activity of V4 countries (Czech Republic, Hungary, Poland, Slovakia) between the years 2000 and 2013.

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