Optimal Public Debt Management and Liquidity Provision

Optimal Public Debt Management and Liquidity Provision

We study the Ramsey policy problem in an economy in which firms face a collateral constraint. Issuing more public debt alleviates this friction by increasing the aggregate quantity of collateral. In so doing, however, the issuance of more debt also raises interest rates, which in turn increases the...

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Bibliographic Details
Main Authors: Angeletos, George-Marios, Collard, Fabrice, Dellas, Harris, Diba, Behzad
Format: Working Paper
Published: Cambridge, MA: Department of Economics, Massachusetts Institute of Technology 2013
Subjects:
public debt
liquidity
optimal fiscal policy
Ramsey
Friedman rule
financial frictions
Online Access:http://hdl.handle.net/1721.1/76742

Internet

http://hdl.handle.net/1721.1/76742

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