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Marketing of public debt : the fixed-price technique


  • Graziella Bertocchi

    (Department of Economics, Brown University,USA)


We develop a simple model in which government bonds are marketed at a present yield, rather than at a competitive one, and we study the consequences of this debt management choice on market equilibrium and the dynamics of debt accumulation. We show how equilibrium sequences with demand rationing are associated with interest costs that are higher than under competition and that supply rations are unsustainable. In the long run, if the debt manager follows an optimal policy in terms of service costs minimization and consistently responds to the signals represented by the rations, the economy converges to the competitive stationary state with no debt.

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  • Graziella Bertocchi, 1993. "Marketing of public debt : the fixed-price technique," Finnish Economic Papers, Finnish Economic Association, vol. 6(2), pages 79-88, Autumn.
  • Handle: RePEc:fep:journl:v:6:y:1993:i:2:p:79-88

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    References listed on IDEAS

    1. Vartia, Tor Eriksson & Antti Suvanto, & Pentti,, 1989. "Wage Setting in Finland," Discussion Papers 286, The Research Institute of the Finnish Economy.
    2. Holmlund, Bertil, 1983. " Payroll Taxes and Wage Inflation: The Swedish Experience," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(1), pages 1-15.
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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook


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