Fiscal Policy and Microstructure of Treasury Bonds
AbstractThis paper presents an alternative approach to understand the role of insurer in an economy with incomplete market. Based in a simple Stokey-Lucas framework. I construct a model with microstructure in the treasury bond markets with heterogenous bidders. The quantities and prices of the treasury bonds are a result of an auction mechanism, where the agents infer the private valuation distribution of others agents in order to obtain individual valuations. In this environment, the government borrowing constraint is endogenously determined by strategic behavior, and therefore the government insurer role depends on the size of incompleteness of public debt markets
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 328.
Date of creation: 04 Jul 2006
Date of revision:
Heterogenous Agents; Microstructure Models; Fiscal Policy;
Find related papers by JEL classification:
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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