transparency and external debts. For example, a one-point increase in the data transparency index conditional on lower external debt would reduce sovereign spreads by 0.00224 and conditional on an improvement in ICRG would decrease sovereign spreads by 0.713. As a consequence, a combination of higher data transparency and better institutional quality would reduce bond spreads, and hence lower the costs of borrowing.

The econometric results from Tables 4 and 5 are consistent with the results from fixed effects and are more robust. For example, the coefficients of GDP per capita and GDP growth are consistently positive and significant, therefore, higher GDP per capita and higher economic activity would reduce sovereign bond spreads (lower costs of borrowing). Robust results of positive and significant coefficients of CPI inflation indicate that higher domestic inflation increases the costs of borrowing. The coefficients of VIX are robustly positive and significant and the coefficients of 10-year US Treasury bond yield are robustly negative and significant. Accordingly, higher global market volatility and lower US bond yield increase the costs of borrowing. As a result, both push (global market volatility and US Treasury bond yields) and pull (i.e. GDP, CPI inflation, institutional quality, data transparency) factors matter for sovereign bonds spreads.

Table 6 includes trade and financial openness variables as well as its interactions with data transparency indicators. Overall the results from IV estimations are consistent with the results from the fixed effect estimations. Trade openness and financial openness have a negative and significant impact on sovereign bond spreads. Therefore opening-up markets will bring more benefits in terms of lower borrowing costs. For instance, a one-point increase in trade openness and in financial openness decreases borrowing costs by 0.53 points ([1] in Table 6) and by 0.899 points ([3] in Table 6), respectively. When both variables are jointly included in the specification, a one-point increase in both trade and financial openness reduces borrowing costs by 0.51 and 0.0635, respectively in the same regression ([5] in Table 6). The interaction term between data transparency and trade openness is negative and statistically significant when using the IMF data transparency index ([6] in Table 6). The coefficient estimate suggests that a one-point increase in this interaction reduces borrowing costs by 0.434 points. The interaction between IMF data transparency and financial openness does not show any significant results. GDP growth reduces sovereign bond spreads while the VIX index increases spreads robustly. GDP per capita also reduces bond spreads. Higher CPI inflation, higher global market volatility and lower US bond yield increase bond spreads, and hence raise the cost of borrowing.

In Table 6 we find robust results with the World Bank data transparency variable and, additionally, we find some significant results when decomposing the World Bank data transparency index into its methodology, periodicity and timeliness, and data source components. Next, we introduce the lag of trade and financial openness variables as instrumental variables, to control for endogeneity, and include those interactions with data transparency indicators in Table 7.

Table 7 shows that the results from the IV estimations are robust and consistent with the findings from previous regressions. GDP growth, for instance, reduces sovereign bond spreads while the VIX index increases spreads robustly. GDP per capita also reduces bond spreads. Higher CPI inflation, higher global market volatility and lower US bond yield increase bond spreads, and 12