Government Asset and Liability Management in a Era of Vanishing Public Debt

Henning Bohn

Journal of Money, Credit and Banking, 2002, vol. 34, issue 3, 887-933

Abstract: The paper examines alternative options for managing public debt and public assets in a government balance sheet framework that includes the Treasury, the Federal Reserve, and Social Security. Even after September 11, U.S. fiscal policy is on a trajectory to accumulate substantial "uncommitted funds." The paper examines how such funds should be invested. I conclude that high-quality fixed-income securities are the best benchmark and that Social Security is the most appropriate government asset manager. The analysis of policy alternatives reveals a trilemma between maintaining a liquid Treasury market, minimizing rent seeking, and facilitating intergenerational risk sharing.

Date: 2002
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Journal Article: Government asset and liability management in an era of vanishing public debt (2002)
Working Paper: Government Asset and Liability Management in an Era of Vanishing Public Debt (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:34:y:2002:i:3:p:887-933

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