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The Safe-Asset Share

Author

Listed:
  • Gary Gorton
  • Stefan Lewellen
  • Andrew Metrick

Abstract

We document that the percentage of all U.S. assets that are "safe" has remained stable at about 33 percent since 1952. This stable ratio is a rare example of calm in a rapidly changing financial world. Over the same time period, the ratio of U.S. assets to GDP has increased by a factor of 2.5, and the main supplier of safe financial debt has shifted from commercial banks to the "shadow banking system." We analyze this pattern of stylized facts and offer some tentative conclusions about the composition of the safe-asset share and its role within the overall economy.

Suggested Citation

  • Gary Gorton & Stefan Lewellen & Andrew Metrick, 2012. "The Safe-Asset Share," American Economic Review, American Economic Association, vol. 102(3), pages 101-106, May.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:101-06
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.3.101
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    References listed on IDEAS

    as
    1. Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-1061, April.
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    Citations

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    Cited by:

    1. Huber, Florian & Punzi, Maria Teresa, 2017. "The shortage of safe assets in the US investment portfolio: Some international evidence," Journal of International Money and Finance, Elsevier, vol. 74(C), pages 318-336.
    2. Juliane M. Begenau, 2015. "Capital Requirements, Risk Choice, and Liquidity Provision in a Business Cycle Model," Harvard Business School Working Papers 15-072, Harvard Business School, revised Sep 2016.
    3. Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-1438, April.
    4. G. Chiesa, 2014. "Safe Assets’ Scarcity, Liquidity and Spreads," Working Papers wp927, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Krishnamurthy, Arvind & Vissing-Jorgensen, Annette, 2015. "The impact of Treasury supply on financial sector lending and stability," Journal of Financial Economics, Elsevier, vol. 118(3), pages 571-600.
    6. Ahnert, Toni & Perotti, Enrico C, 2015. "Cheap but flighty: how global imbalances create financial fragility," CEPR Discussion Papers 10502, C.E.P.R. Discussion Papers.
    7. Michael Andreasch & Pirmin Fessler & Martin Schürz, 2012. "Savings Deposits in Austria – A Safety Net in Times of Crisis," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 81-95.
    8. Harold Cole & Thomas F. Cooley, 2013. "Rating Agencies," Working Papers 2013-31, Economic Research Institute, Bank of Korea.
    9. Rocheteau, Guillaume & Rodriguez-Lopez, Antonio, 2014. "Liquidity provision, interest rates, and unemployment," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 80-101.
    10. Nicola Pavoni & Sarah Auster, 2016. "Optimal Delegation, Unawareness, and Financial Intermediation," 2016 Meeting Papers 1106, Society for Economic Dynamics.
    11. Anne-Marie Rieu-Foucault, 2017. "Point sur la fourniture de liquidié publique," EconomiX Working Papers 2017-27, University of Paris Nanterre, EconomiX.
    12. Ricardo J. Caballero & Alp Simsek, 2016. "A Model of Fickle Capital Flows and Retrenchment," NBER Working Papers 22751, National Bureau of Economic Research, Inc.
    13. Lucyna Gornicka, 2014. "Shadow Banking and Traditional Bank Lending: The Role of Implicit Guarantees," Tinbergen Institute Discussion Papers 14-035/VI/DSF74, Tinbergen Institute, revised 16 Jun 2014.
    14. Kacperczyk, Marcin & Perignon, Christophe & Vuillemey, Guillaume, 2017. "The Private Production of Safe Assets," CEPR Discussion Papers 12086, C.E.P.R. Discussion Papers.
    15. Torsten Ehlers & Steven Kong & Feng Zhu, 2018. "Mapping shadow banking in China: structure and dynamics," BIS Working Papers 701, Bank for International Settlements.
    16. Barrdear, John & Kumhof, Michael, 2016. "The macroeconomics of central bank issued digital currencies," Bank of England working papers 605, Bank of England.
    17. Angel Ubide, 2013. "How to Form a More Perfect European Banking Union," Policy Briefs PB13-23, Peterson Institute for International Economics.
    18. repec:bla:intfin:v:19:y:2016:i:3:p:311-332 is not listed on IDEAS
    19. Michael Kumhof & Jaromir Benes, 2012. "The Chicago Plan Revisited," IMF Working Papers 12/202, International Monetary Fund.
    20. Narayan Bulusu & Pierre Guérin, 2018. "What Drives Interbank Loans? Evidence from Canada," Staff Working Papers 18-5, Bank of Canada.
    21. repec:eee:moneco:v:87:y:2017:i:c:p:52-66 is not listed on IDEAS
    22. Juliane Begenau, 2015. "Capital Requirements, Risk Choice, and Liquidity Provision in a Business Cycle Model," 2015 Meeting Papers 687, Society for Economic Dynamics.
    23. Xiong, Qizhou, 2017. "The premium of government debt: Disentangling safety and liquidity," IWH Discussion Papers 11/2017, Halle Institute for Economic Research (IWH).
    24. Golec, Pascal & Perotti, Enrico, 2017. "Safe assets: a review," Working Paper Series 2035, European Central Bank.

    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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