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EN
The article presents research proving the existence of an objective risk premium in economic activity. Its value enables to cover natura! costs of risk and in some cases generate profits. Knowledge on the risk premium allows to assess the fairness of wages, prices and profits, that is to shape socio-economic system in accordance with social expectations and needs, at the same time respecting market economy.
EN
This paper explores factors that drive government yield spreads of EU countries’ bonds issued between 2000 and 2012. Using panel regression, it identifies three factors: a country specific factor related to country’s default risk, a common factor related to general risk aversion premium, and a liquidity factor. It compares bond pricing before and after the collapse of Lehman Brothers in October 2008, bond pricing of the euro area member states with countries outside of the monetary union and in particular contrasts pricing of these two groups of countries before and after the crisis.
EN
Realistically, monetary policy in the contemporary economy has been facing functioning of commercial banks inconsistent with the textbook model. According to the Goodhart's law, banks have been finding out the solutions effective to protect their income notwithstanding the intentions of the monetary authority. Such motivations have also been driving the increasing involvement of the banks in the use of i.a. fixed interest rate securities in management of bank assets and liabilities. This has been contributing to unpredictability of effects of the changes of the short-term interest rate of the central bank on the financial sector and real economy.
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