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

Henning Bohn

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

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.

Keywords: Government; Asset; Liability; Management; Public Debt (search for similar items in EconPapers)
Date: 2002-01-01
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Citations: View citations in EconPapers (6)

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Journal Article: Government asset and liability management in an era of vanishing public debt (2002)
Journal Article: Government Asset and Liability Management in a Era of Vanishing Public Debt (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsbec:qt1168177r

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