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Accounting for the federal government's cost of funds

Author Info

Listed author(s):
  • George J. Hall
  • Thomas J. Sargent

Abstract

This article describes and defends the authors' corrections to the federal government's flawed measure of its cost of funds. Further, it examines how the maturity structure of the debt influences the way inflation risk and interest rate risk are shared by the government and its creditors.

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File URL: http://www.chicagofed.org/digital_assets/publications/economic_perspectives/1997/epjulyaug97b.pdf
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Article provided by Federal Reserve Bank of Chicago in its journal Economic Perspectives.

Volume (Year): (1997)
Issue (Month): Jul ()
Pages: 18-28

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Handle: RePEc:fip:fedhep:y:1997:i:jul:p:18-28:n:v.21no.4
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Keywords: Gross domestic product ; Inflation (Finance) ; Interest rates;

References listed on IDEAS
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  1. Missale, Alessandro & Blanchard, Olivier Jean, 1994. "The Debt Burden and Debt Maturity," American Economic Review, American Economic Association, vol. 84(1), pages 309-319, March.
  2. Thomas J. Sargent & Neil Wallace, 1981. "Some unpleasant monetarist arithmetic," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall.
  3. Robert R. Bliss, 1996. "Testing term structure estimation methods," FRB Atlanta Working Paper 96-12, Federal Reserve Bank of Atlanta.
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Cited by:

  1. George J. Hall & Thomas J. Sargent, 2011. "Interest Rate Risk and Other Determinants of Post-WWII US Government Debt/GDP Dynamics," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(3), pages 192-214, July.
  2. Equiza-Goñi, Juan, 2016. "Government debt maturity and debt dynamics in euro area countries," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 292-311.
  3. Shaun P. Vahey & James M. Nason, 2007. "The McKenna Rule and UK World War I Finance," American Economic Review, American Economic Association, vol. 97(2), pages 290-294, May.
  4. Coe, P.J. & Pesaran, M.H. & Vahey, S.P., 2003. "Scope for Cost Minimization in Public Debt Management: the Case of the UK," Cambridge Working Papers in Economics 0338, Faculty of Economics, University of Cambridge.
  5. Hanno Lustig, 2005. "Does the US government Hedge against Defense Expenditure Risk? (joint with Chris Sleet and Sevin Yeltekin)," UCLA Economics Online Papers 356, UCLA Department of Economics.

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