First, the reduction in the lending friction immediately increases the rate of return on foreign bonds, thus raising the interest payment received by skilled labor. This induces them to cut their working hours by 0.61% which immediately increases the skill premium by 0.66%. The higher return on...
Furthermore, on-the-run Treasury bills and bonds often trade at a premium to less-liquid off-the-run Treasury securities (Amihud, Mendelson, 1991, Kamara, 1994, Krishnamurthy, 2002).1 We provide evidence that the market incorporates a significant additional near-money premium into the prices ...
solving the problem that the yields of bank bonds issued on different dates are not comparable.Fourthly,the empirical results are consistent with the credit rating orders of the banks in our country by the Moody's company,which verifies the rationality of the models in the paper.The empirical ...
In contrast, we harken to an older empirical literature that attributes the term premium to the idea that short maturity bonds are inherently more liquid. The goal of this paper is to provide a theoretical justification of this concept. To that end, we employ a monetary-search model extended ...