Skip to main content
eScholarship
Open Access Publications from the University of California

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

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.

Main Content
For improved accessibility of PDF content, download the file to your device.
Current View