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Safe assets

dc.contributor.authorBrunnermeier, MK
dc.contributor.authorMerkel, SA
dc.contributor.authorSannikov, Y
dc.date.accessioned2024-01-29T11:22:01Z
dc.date.issued2024-09-16
dc.date.updated2024-01-28T20:52:45Z
dc.description.abstractThe price of a safe asset reflects not only the expected discounted future cash flows but also future service flows, since retrading allows partial insurance of idiosyncratic risk in an incomplete markets setting. This lowers the issuers’ interest burden. As idiosyncratic risk rises during recessions, so does the value of the service flows bestowing the safe asset with a negative β. The resulting exorbitant privilege resolves government debt valuation puzzles and allows the government to run a permanent (primary) deficit without ever paying back its debt, but the government faces a debt Laffer curve.en_GB
dc.identifier.citationPublished online 16 September 2024en_GB
dc.identifier.doi10.1086/730547
dc.identifier.urihttp://hdl.handle.net/10871/135183
dc.language.isoenen_GB
dc.publisherThe University of Chicago Pressen_GB
dc.rights.embargoreasonUnder embargo until 16 September 2025 in compliance with publisher policyen_GB
dc.rights© 2024 The University of Chicago.. This version is made available under the CC-BY-NC 4.0 license: https://creativecommons.org/licenses/by-nc/4.0/  en_GB
dc.subjectSafe Asseten_GB
dc.subjectExorbitant Privilegeen_GB
dc.subjectGovernment Debten_GB
dc.subjectDebt Laffer Curveen_GB
dc.subjectPonzi Schemeen_GB
dc.subjectFiscal Capacityen_GB
dc.subjectr vs. gen_GB
dc.titleSafe assetsen_GB
dc.typeArticleen_GB
dc.date.available2024-01-29T11:22:01Z
dc.identifier.issn1537-534X
dc.descriptionThis is the final version. Available from the University of Chicago Press via the DOI in this recorden_GB
dc.identifier.eissn1537-534X
dc.identifier.journalJournal of Political Economyen_GB
dc.rights.urihttps://creativecommons.org/licenses/by-nc/4.0/  en_GB
dcterms.dateAccepted2023-11-10
dcterms.dateSubmitted2022-11-23
rioxxterms.versionVoRen_GB
rioxxterms.licenseref.startdate2023-11-10
rioxxterms.typeJournal Article/Reviewen_GB
refterms.dateFCD2024-01-28T20:52:47Z
refterms.versionFCDAM
refterms.panelCen_GB


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© 2024 The University of Chicago.. This version is made available under the CC-BY-NC 4.0 license: https://creativecommons.org/licenses/by-nc/4.0/  
Except where otherwise noted, this item's licence is described as © 2024 The University of Chicago.. This version is made available under the CC-BY-NC 4.0 license: https://creativecommons.org/licenses/by-nc/4.0/