Strategic Treasury Debt Management in Public Policy

Campbell Harvey

Review of Policy Research, 1993, vol. 12, issue 3‐4, 76-89

Abstract: The Treasury should supplement its bond offerings with adjustable‐rate coupon bonds. The adjustable coupon would be linked to the six‐month Treasury bill auction yield. Given the different magnitude of adjustable and fixed mortgage rates, the interest servicing costs would be dramatically lower for the floating‐coupon bonds. This idea is already a proven winner in the corporate bond market where close to 30 percent of new Eurobond offerings in the last 10 years have been adjustable‐rate bonds. In addition to reducing servicing costs, the strategy will relieve some of the burden on the long‐maturity fixed‐coupon bonds. Reducing the supply of the fixed‐coupon bonds should increase prices and decrease long‐term yields. Reduction in long‐term interest rates enhances spending, construction and capital expenditures. Most importantly, these bonds help enforce a low inflation policy.

Date: 1993
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/j.1541-1338.1993.tb00552.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:revpol:v:12:y:1993:i:3-4:p:76-89

Ordering information: This journal article can be ordered from
http://www.wiley.com/bw/subs.asp?ref=1541-132x

Access Statistics for this article

Review of Policy Research is currently edited by Christopher Gore

More articles in Review of Policy Research from Policy Studies Organization Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().