Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144820
Authors: 
Schuknecht, Ludger
Year of Publication: 
2016
Series/Report no.: 
CFS Working Paper Series 532
Abstract: 
This study looks at the interrelationship between fiscal policy and safe assets as there is surprisingly little analysis about this beyond fleeting references. The study argues that from a certain point more public debt will not "buy" more safety: countries face a kind of "safe-assets Laffer curve" with a maximum amount of safe assets at some level of indebtedness. The position and "stability" of this curve depend on a number of national and international factors, including the international risk appetite and, as a more recent factor, QE policies by central banks. The study also finds evidence of declining safe assets as reflected in government debt ratings.
Subjects: 
fiscal policy
public debt
safe assets
financial markets
JEL: 
E62
G10
Document Type: 
Working Paper

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