The Perception of Government Bonds and Money as Net Wealth: An Integrated Approach

Alpha Chiang and Stephen Miller
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Alpha Chiang: University of Connecticut

Eastern Economic Journal, 1998, vol. 24, issue 4, 435-448

Abstract: Although much work examines whether government bonds constitute net wealth, little attention focuses on whether government money does. Most analysts merely assert that government money is net wealth. In an inflationary environment, however, money experiences "expected-inflation discounting" just as bonds experience "tax discounting." Indeed, Chiang and Miller (1988) find empirical evidence suggesting that the private sector discounts money more heavily than bonds. This paper provides the theoretical underpinnings for the two types of discounting in an integrated approach, where both new money and new bonds can finance the interest on outstanding bonds.

Keywords: Government Bonds; Money (search for similar items in EconPapers)
JEL-codes: E51 H63 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:24:y:1998:i:4:p:435-448

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