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BOI Study Sees EMU Risks Inflating Italy's Borrowing Costs
A recent study for the Bank of Italy argues that the spread between Italian and German government borrowing costs is not justified by economic fundamentals and may be explained by a risk premium associated with a potential break-up of the Eurozone. The study released Tuesday by the Italian central bank, entitled "Recent Estimates of Sovereign Risk Premia for Euro-Area Countries," supplies econometric backing for the arguments of peripheral governments that they are paying the price of mounting doubts over the survival of the euro. According to the authors: "Both previous analyses and the new evidence presented in ... (full story)