 The benefits of expediting government gold salesDale Henderson, Stephen Salant, John S. Irons and Sebastian Thomas Review of Financial Economics, 2007, vol. 16, issue 3, 235-258 Abstract: Additional gold can be made available either by mining at high cost (approximately $250 per ounce in 1997 dollars) or by mobilizing government stocks at zero cost. Governments own massive above‐ground stocks but loan out only a small percentage of these stocks. Making all government gold available for private uses immediately through some combination of sales and loans maximizes total welfare from private uses, a consequence of the first welfare theorem. We simulate a calibrated version of our model to quantify the effects of liquidating government stocks on alternative dates. If governments sell immediately rather than never, total welfare increases by $340 billion; if they make an unanticipated sale in 20 years, $105 billion of that amount is lost. By depressing prices, such sales benefit depletion and service users but injure private owners of stocks above and below‐ground. However, the injury to above‐ground stock owners is more than offset by the benefits to service users—often the same individuals. Mine owners would be the principal losers; however, they could be compensated (twice over) from government sales revenue without any need for tax increases. Date: 2007 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:16:y:2007:i:3:p:235-258 Access Statistics for this article More articles in Review of Financial Economics from John Wiley & Sons |
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