Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/340020 
Year of Publication: 
2026
Series/Report no.: 
IMFS Working Paper Series No. 239
Publisher: 
Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS), Frankfurt a. M.
Abstract: 
German government debt is considered a safe asset in times of turbulence. We estimate the impact of changes in the risk appetite of global investors on weekly investment fund flows into the German sovereign bond market. Our key contribution is to allow the impact of such shocks to depend on the extent of disagreement about the path of fiscal policy, which we measure from the texts of all speeches delivered in the German Bundestag. An increase in global risk causes strong inflows into German government bonds if the coalition government is united, but only small and short-lived inflows if disagreement within the government is high. In contrast, disagreement between the government and the opposition has no moderating effect on fund inflows. We also find that the dependence of safe-haven flows on the prevailing level of fiscal disagreement is higher for actively managed funds and for funds domiciled abroad.
Subjects: 
capital flows
disagreement
policy uncertainty
safe asset
text analysis
JEL: 
F41
G15
H30
Document Type: 
Working Paper

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