With public debt soaring across the world, a growing concern is whether current debt levels are a harbinger of fiscal crises, thereby restricting the policy space in a downturn. The empirical evidence to date is however inconclusive, and the true cost of debt may be overstated if interest rates...

We examine the incentive of corporate bond fund managers to manipulate portfolio risk in response to competitive pressure. We find that bond funds engage in a reverse fund tournament in which laggard funds actively de-risk their portfolios, trading-off higher yields for more liquid and safer...

We examine the incentive of corporate bond fund managers to manipulate portfolio risk in response to competitive pressure. We find that bond funds engage in a reverse fund tournament in which laggard funds actively de-risk their portfolios, trading-off higher yields for more liquid and safer...

This paper analyzes the cause-and-effect relationships between the Fed’s balance sheet and consumer prices, and between the federal government debt and the Fed’s balance sheet during the period 2008Q1to 2021Q4. Although contemporaneous Fed purchases of public and private sector debt and...

Is there a role for debt beyond curing overaccumulation of capital? Does dynamic efficiency and the infeasibility of debt Ponzi schemes eliminate any Pareto-improving role for a government in a competitive economy with complete markets? Is there an optimal maturity structure of public debt?...

Two puzzling observations have motivated this paper: First, the standard paradigm of optimal fiscal policy, following Lucas & Stokey (1983), assumes counterfactually that public debt is held in state-contingent securities. Is the existing theory as irrelevant as it is silent about fiscal policy...