The optimal public and private provision of safe assets

• 成果类型: Article; Proceedings Paper
• 署名作者: Azzimonti, Marina; Yared, Pierre
• 署名单位: State University of New York (SUNY) System; Stony Brook University; National Bureau of Economic Research; Columbia University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.01.012
• 发表日期: 2019
• 页码: 126-144
• 关键词: Optimal taxation; debt management; Income distribution

摘要

We develop a theory of optimal government debt in which publicly-issued and privately issued safe assets are substitutes. While government bonds are backed by future tax revenues, privately-issued safe assets are backed by the future repayment of pools of default able private loans. We find that a higher supply of public debt crowds out privately-issued safe assets less than one for one and reduces the interest spread between borrowing and deposit rates. Our main result is that the optimal level of public debt does not fully crowd out private lending and maintains a positive interest spread. Moreover, the optimal level of public debt is higher the more severe are financial frictions. (C) 2019 Elsevier B.V. All rights reserved.