LONG-TERM GOVERNMENT BOND RATES DETERMINANTS: EVIDENCE FROM THE GREEK ECONOMY

Government bond rates crucially affect a country’s negotiations possibilities when applying for new loans form the secondary market. Greece has a recent and agonizing experience, when countries; officials, speculators, and the international press were against its debt viability. In this research we try to estimate as to how much other variables, such as inflation rates, national debt, and government deficit can interact with one another and finally affect the level of government bond rates. Greece is taken as a sole case in this matter. The VAR approach that is applied results in findings that show that Greece’s bond rates affect inflation, and government debt affects bond rates.