386 Summary Spreads on government bonds are a collective expression of differences in the level of development, risk, expected returns and other essential characteristics of states or regions the bond yields of which we wish to compare. At issue here is a collective expression of factors that work on the bond supply and demand side. These are for example the political environment (or political risks), expected return, economic risks, expected infl ation, expected change in the exchange rate,

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... vency, way in which the bonds of a given state fi t into the portfolios of the major investors and so on. The paper identifi es the infl uence of fi scal and non-fi scal factors on movements in spreads on government bonds in emerging markets. The possibility of isolating fi scal from non-fi scal infl uences on spreads and the identifi cation of the nature of fi scal impacts can be of great importance for the conduct of fi scal policy. The results obtained can be used for an optimisation of fi scal policy so as to avoid negative impacts on yields (i.e. a growth in yields), that is, a growth in the costs of government borrowing. This paper enlarges the line of research by querying whether the structure of defi cit fi nancing (domestic or foreign) has an impact on bond yields in emerging markets, and how this impact is refl ected on the other determinants of fi scal policy.