Governmental Risk Taking Under Market Imperfections: Working Paper 2021-07

Michael Falkenheim

No 57255, Working Papers from Congressional Budget Office

Abstract: An extensive literature debates whether market prices should be used to measure the benefits and costs of risk in government activities or whether the government should be treated as risk neutral. This paper explores the benefits and costs of governmental risk taking in formal models of market imperfections, in which the government serves as an intermediary between different stakeholders in its finances. Some stakeholders cannot participate in markets, either because they belong to future generations or because they have no funds to invest and face borrowing constraints.

JEL-codes: E32 G10 G12 G18 H50 H83 (search for similar items in EconPapers)
Date: 2021-06-16
New Economics Papers: this item is included in nep-mac and nep-ore
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cbo:wpaper:57255

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