According to various studies, sovereign bond spreads often deviate from any "sensible" perception of default risk. It is usually attributed to behavioral effects (overreaction) or illiquidity. The former explanation imposes some irrationality or bounded rationality on investors; while the latter...

Many Central and Eastern European countries are adopting flat tax schemes in order to boost their economies and tax revenues. Though there are signs that some countries do manage to improve on both fronts, it is in general hard to distinguish the behavioral response to tax changes from the...