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Explaining Fluctuations in the Thrift Savings Fund Daily Balance at U.S. Treasury

Author

Listed:
  • Mark Skidmore
  • Camila Alvayay Torrejón
  • David Pare

Abstract

In this paper we document and examine unusual fluctuations in the G-Fund, which is one of five funds available in a voluntary federal government employee retirement savings vehicle called the Thrift Savings Plan. The G-Fund is managed as “internally” held debt by the United States Department of Treasury. Our examination highlights two obscure facts about the G-Fund: 1) The fund is exclusively composed of one-day notes that Treasury redeems and reissues every business day. The daily turnover of the G-Fund results in about $55 trillion in debt reissuance annually; and 2) whenever the federal government is constrained by a debt ceiling, the G-Fund balance drops dramatically and typically does not return to pre-constraint balance levels until the debt ceiling is either expanded or suspended. We document these patterns and ask whether the G-Fund is managed in a way the represents the best interests of the fund contributors.

Suggested Citation

  • Mark Skidmore & Camila Alvayay Torrejón & David Pare, 2021. "Explaining Fluctuations in the Thrift Savings Fund Daily Balance at U.S. Treasury," CESifo Working Paper Series 9084, CESifo.
    • Handle: RePEc:ces:ceswps:_9084
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    References listed on IDEAS

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    1. repec:ucp:bkecon:9780857427342 is not listed on IDEAS
    2. repec:ucp:bkecon:9780857427526 is not listed on IDEAS
    3. McClain, Katherine T. & Wooldridge, Jeffrey M., 1995. "A simple test for the consistency of dynamic linear regression in rational distributed lag models," Economics Letters, Elsevier, vol. 48(3-4), pages 235-240, June.
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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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