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157 INDEX Adrian, Tobias, 35 Agency securities, 45 Aggregate demand: debt management objectives for, 15–16, 27, 29, 34, 36, 45, 68; and liquidity premia, 70, 75; quantitative easing to manage, 4 Aguiar, Mark, 132 Amador, Manuel, 132 Annuities, 111 Arbitrage spreads, 107. See also Bid-ask spreads Argentina: GDP-linked debt in, 130; inflation in, 128 Asset-backed securities, 26 Auction-rate securities, 104 Bank of England, 63, 67, 85, 131 Bank of Japan, 85 Bankruptcy, 131, 132 Banks: Basel III bank liquidity regulations, 17; and fixed-value floating-rate securities, 103, 106; regulation of, 67–68; reserve requirements for, 105 Barro, Robert, 2, 3, 127 Basel III bank liquidity regulations, 17 Benchmark yield curve, 26, 36, 76, 100–101, 111 Bernanke, Ben, 79, 80, 85–86 Bid-ask spreads, 94, 95, 107, 108 Billion Prices Project (MIT), 128 Bitcoin, 103 Borensztein, Eduardo, 130 Bremner, Robert, 83, 84 Bretton Woods system, 62 Budget volatility, 9 Bulow, Jeremy, 132 Bureau of Labor Statistics (BLS), 128 Business cycle, 71, 74 Call options, 108–09, 112 Capital gains, 116, 117 Cecchetti, Stephen G., 81 Central banks: independence of, 80, 81, 85; and liquidity premia, 27; as nontaxable investor, 97, 120; and Taylor rule, 70. See also Federal Reserve Chain-weighted CPI, 128 Chairman of the Fed (Bremner), 83 Checking accounts, 104 Chile, liquid benchmark yield curve in, 26 158 Index Cochrane, John H., 35, 91, 105, 139, 140. See also Debt structure proposal Collateral, 91, 99, 107, 136 Commercial paper, 102, 104 Commodity-price shocks, 131 Consumer price index (CPI), 96, 126, 128 Corporate bonds, 26, 76, 110, 112, 131 Cost minimization objective, 27, 29, 30, 31, 34, 68, 92 Countercyclical monetary policy, 30 Counterparties, 136 Credit risk, 112. See also Default risk Crowding-out motive, 17–18 Crump, Richard K., 35 Cummins, Jason, 83 Deadweight costs of taxes, 2, 7, 8, 13 Debt management: aggregate demand management objective of, 15–16, 27, 29, 34, 45, 68; cost minimization objective of, 27, 29, 30, 31, 34, 68, 92; as financial regulation tool, 16–18; financial stability objective of, 27, 29, 34, 37, 44–45, 68, 93; fiscal risk management objective of, 27, 29, 30, 34, 68; objectives of, 27, 68 Debt rollover crisis, 9–10 Debt structure proposal (Cochrane), 91–146; commentary on, 139–43; fixed-coupon perpetuities, 94–95, 106–15; fixed-value floating-rate securities, 93–94, 99–106; goals, 92–93; indexed perpetuities, 96, 126–29; nominal perpetuity, fixed-coupon debt, 94; securities, 93–139; swaps, 97–98, 134–36; tax-free securities, 96–97, 115–25; variable-coupon debt, 97, 129–34 Debt-to-GDP ratio, 13, 14, 28–29, 71–72 Default-free short-term rate, 11–12 Default risk, 110, 112, 129, 132 Derivatives, 111 Direct Express, 102 Dividends, 131 Dornbusch, Rudiger, 80 Duffie, Darrell, 114, 139 Dybvig, Phillip H., 121 Eaton, Jonathan, 132 Eberly, Janice, 28 Endowments, 97, 120 Estate planning, 111, 118 “Even keeling” policy, 62 Exchange rates, 53 Fannie Mae, 47 Federal funds rate, 101 Federal Open Market Committee (FOMC), 72, 83 Federal Reserve: debt management conflicts with Treasury Department, 43–89; and debt-toGDP ratio, 71–72; and “even keeling” policy, 62; and fixedvalue floating-rate debt, 103–04; Foreign Portfolio Holdings, 124–25; independence of, 84; and inflation-indexed debt, 23; and liquidity premia, 27, 70–71; and monetary policy cycle, 67–70; objectives of, 29, 36, 58, 72; and Operation Twist (1961), 62, 78; and optimal debt maturity, 67–70; optimal division of labor with Treasury, 67–75; and quantitative easing, 15; Treasury cooperation with, 58–67; and Treasury policy (2008–14), 45–58 Fedwire, 103 Ferguson, Niall, 25 Fernandez, Raquel, 132 Financial crisis (2008–09), 24, 28, 74 Financial regulation: of banks, 67–68; Basel III bank liquidity regulations, 17; debt management as tool for, 16–18 Index 159 Financial stability: as debt management objective, 27, 29, 34, 37, 44–45, 68, 93; and fixed-value floating-rate securities, 102 Fiscal risk: and average debt maturity, 44, 75; debt management objectives for, 3–4, 9, 13, 27, 29, 30, 34, 68; hedging of, 14–15; and inflationindexed debt, 23, 25; and liquidity services, 5; and maturity, 137 Fitted yields, 11 Fixed-coupon perpetuities, 94–95, 106–15; accounting for, 115; call options, 108–09; hedging with, 111–12; historical precedents, 109–10; and intermediate-maturity supply, 112–14; price impact of, 108; rationale for, 106–07; retail market for, 111–12; wholesale market for, 111–12 Fixed-value floating...


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Subject Headings

  • Debts, Public -- United States.
  • Finance, Public -- United States.
  • Fiscal policy -- United States.
  • Monetary policy -- United States.
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