Social Risk, Fiscal Risk, and the Portfolio of Government Programs

• 成果类型: Article
• 署名作者: Hanson, Samuel G.; Scharfstein, David S.; Sunderam, Adi
• 署名单位: Harvard University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy086
• 发表日期: 2019
• 页码: 2341
• 关键词: CORPORATE-INVESTMENT; optimal taxation; public-goods; MARKET; ECONOMICS; equilibrium; uncertainty; valuation; provision; monetary

摘要

We develop a model of government portfolio choice in which the government chooses the scale of risky projects in the presence of market failures and tax distortions. These frictions motivate the government to manage social risk and fiscal risk. Social risk management favors programs that ameliorate market failures in bad times. Fiscal risk management makes unattractive programs involving large government outlays when other government programs also require large outlays. These two risk management motives often conflict. Using the model, we explore how the attractiveness of different financial stability programs varies with the government's fiscal burden and characteristics of the economy. (JEL G11, G28, G32)