Government Asset and Liability Management in an Era of Vanishing Public Debt
AbstractThe paper examines alternative options for managing public debt and public assets in a government balance sheet framework that includes the Treasury, the Federal Reserve, and social security. Even after September 11, U.S. fiscal policy is on a trajectory to accumulate substantial â€œuncommitted funds.â€ The paper examines how such funds should be invested. I conclude that high-quality fixed-income securities are the best benchmark and that social security is the most appropriate government asset manager. The analysis of policy alternatives reveals a trilemma between maintaining a liquid Treasury market, minimizing rent-seeking, and facilitating intergenerational risk sharing.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt1168177r.
Date of creation: 01 Jan 2002
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Government; Asset; Liability; Management; Public Debt;
Other versions of this item:
- Bohn, Henning, 2002. "Government Asset and Liability Management in a Era of Vanishing Public Debt," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(3), pages 887-933, August.
- Henning Bohn, 2002. "Government asset and liability management in an era of vanishing public debt," Proceedings, Federal Reserve Bank of Cleveland, pages 887-940.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vincent Reinhart & Brian Sack, 2000. "The Economic Consequences of Disappearing Government Debt," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 163-220.
- Martin Feldstein, 1997.
"The Missing Piece in Policy Analysis: Social Security Reform,"
NBER Working Papers
5413, National Bureau of Economic Research, Inc.
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- Barro, Robert J., 1979.
"On the Determination of the Public Debt,"
3451400, Harvard University Department of Economics.
- Michael J. Fleming, 2000. "The benchmark U.S. Treasury market: recent performance and possible alternatives," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 129-145.
- Douglas W. Elmendorf & Jeffrey B. Liebman, 2000. "Social Security Reform and National Saving in an Era of Budget Surpluses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 1-72.
- Lassila , Jukka & Valkonen, Tarmo, 2008. "Population ageing and fiscal sustainability in Finland: a stochastic analysis," Research Discussion Papers 28/2008, Bank of Finland.
- Udaibir S. Das & Yinqiu Lu & Michael G Papaioannou & Iva Petrova, 2012. "Sovereign Risk and Asset and Liability Managementâ€”Conceptual Issues," IMF Working Papers 12/241, International Monetary Fund.
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