Abstract
This paper estimates the impact of foreign participation in determining long-term local currency government bond yields and volatility in a group of emerging markets (EMs) from 2000 to 2009. The results of a panel data analysis of 10 EMs show that greater foreign participation in the domestic government bond market tends to significantly reduce long-term government yields. Moreover, greater foreign participation does not necessarily result in increased volatility in bond yields in EMs and, in fact, could even dampen volatility in some instances.
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