We provide new insights into the relationship between financial market tightness and real activity, using a new database of corporate bonds issued in eight European countries. Bond spreads have a ...significant negative relationship with four real activity variables at horizons 1–8 quarters ahead. The relationship is robust to adding measures of monetary policy tightness and leading indicators, providing strong support for models previously only evaluated on US data. A subset of northern European countries have similar sensitivity of real GDP to bond spreads, but others have greater sensitivity to bond spreads, revealing diverse responses in Europe to financial market tightness.
In this article, we provide first-hand evidence that leadership quality matters for the quality of healthcare provision, based on NHS England hospital trust data between 2010 and 2014. This is the ...first paper to study this relationship using individual leadership styles, namely, task-, relations-, change- and integrity-oriented as independent variables and four different metrics of quality of healthcare as dependent variables, including staff and patient satisfaction survey measures and clinical performance indicators. We find that task-oriented leadership has the strongest effect on staff-rated hospital quality while change-oriented leadership affects most patient satisfaction and the clinical measure. We also find some evidence that organizational autonomy and competition across hospitals moderates the effect of leadership quality on healthcare quality. Overall, our results have important policy implications for continued support for the development and funding of integrated leadership programs in healthcare.
We investigate the risk spillover from euro area government bond spreads (relative to a safe German government bond of similar maturity) to nonfinancial corporate bonds in France, the Netherlands ...('hard' euro-area countries), and Italy, Portugal and Spain ('soft' euro-area countries). In addition to standard firm- and bond-specific determinants of corporate bonds (capturing liquidity and tax effects, and other euro area macroeconomic risks), we show that there is significant risk transfer from government bonds to the nonfinancial corporate sector. After decomposing the government bond spread into a default risk and a currency redenomination risk component, associated with a possible split in the euro, we find that redenomination risk has been a significant factor in the pricing of corporate bonds, particularly in the 'soft' euro-area countries.
In this thesis we examine the relationship between corporate bond spreads and economic activity in eight European countries using data on 500 corporate bonds between July 1994 and May 2011 for the ...United Kingdom and between October 2001 and May 2011 for Austria, Belgium, France, Germany, Italy, Netherlands and Spain. We construct a unique dataset of corporate bond spreads from bond-level data employing a similar methodology to Gilchrist and Zakrajsek (2012a) in the United States. Thus, we ensure that our credit spread measure is not distorted by illiquidity, embedded options, or mismatched maturities and coupon schedules between the two bond instruments being compared. We evaluate the importance of the country-level corporate bond spread index in .predicting the future growth in real activity at the individual country level for various measures of economic activity (such as industrial production, unemployment available at monthly frequency; and employment and real GOP available at quarterly frequency). We find that the credit spread index is a consistent predictor of real activity even when we include measures of monetary policy tightness (such as the term spread and the real interest rate), other leading indicator variables (economic sentiment and consumer confidence) and factors extracted from a large macro dataset. Our results are consistent at different forecasting horizons and are robust to different measures of the credit spread index. We then decompose the credit spread by purging it of expected default, tax and liquidity premia in an attempt to determine what component accounts for its information Content. We find that the excess bond premium, an indicator of financial market tightness, is the major driving source of the spread's predictive content. When)He compare the predictive ability of the credit spread and the excess bond premium across individual countries within the Euro area and Outside the Euro area, we find that mainly the core European countries have similar predictive ability, while the other countries in the Euro area and the UK are more heterogeneous.
In this thesis we examine the relationship between corporate bond spreads and economic activity in eight European countries using data on 500 corporate bonds between July 1994 and May 2011 for the ...United Kingdom and between October 2001 and May 2011 for Austria, Belgium, France, Germany, Italy, Netherlands and Spain. We construct a unique dataset of corporate bond spreads from bond-level data employing a similar methodology to Gilchrist and Zakrajsek (2012a) in the United States. Thus, we ensure that our credit spread measure is not distorted by illiquidity, embedded options, or mismatched maturities and coupon schedules between the two bond instruments being compared. We evaluate the importance of the country-level corporate bond spread index in .predicting the future growth in real activity at the individual country level for various measures of economic activity (such as industrial production, unemployment available at monthly frequency; and employment and real GOP available at quarterly frequency). We find that the credit spread index is a consistent predictor of real activity even when we include measures of monetary policy tightness (such as the term spread and the real interest rate), other leading indicator variables (economic sentiment and consumer confidence) and factors extracted from a large macro dataset. Our results are consistent at different forecasting horizons and are robust to different measures of the credit spread index. We then decompose the credit spread by purging it of expected default, tax and liquidity premia in an attempt to determine what component accounts for its information Content. We find that the excess bond premium, an indicator of financial market tightness, is the major driving source of the spread's predictive content. When)He compare the predictive ability of the credit spread and the excess bond premium across individual countries within the Euro area and Outside the Euro area, we find that mainly the core European countries have similar predictive ability, while the other countries in the Euro area and the UK are more heterogeneous.
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