This paper provides a new insight into the relationship between financial market tightness and real activity using a unique new database extracted from Bloomberg to construct a credit spread index from 500 corporate bonds issued in eight European countries. We find that European bond spread...

In this paper we examine the relationship between real activity and financial market tightness in Europe using data on 500 corporate bonds between July 1994 and May 2011 for Austria, Belgium, France, Germany, Italy, Netherlands, and Spain – and the United Kingdom. We evaluate the importance of...