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- Title
THE LIQUIDITY IMPACT OF DEBT MANAGEMENT.
- Authors
van Horne, James C.; Bowers, David A.
- Abstract
The purpose of this paper is to develop a new measure of liquidity of the government debt, to analyze empirically debt-management activities for the 1958-65 period, and to explore some of the implications of these activities. <BR> In this paper, we develop a measure of liquidity for the marketable, publicly-held, government debt, based upon variability of market prices for various-maturity Treasury securities. Through a series of calculations, a weighted-average liquidity coefficient is obtained for the end of each quarter for the 1958-65 period. Changes in this coefficient reflect the liquidity impact of changes in the maturity composition of the marketable portion of the publicly-held debt--or of debt management, as defined. We find that, for the period studied, changes in the maturity composition of the debt had very little effect upon the liquidity of the economy; changes in total liquidity primarily were the result of changes in the amount of debt--fiscal and monetary policy. In addition, the evidence in this paper suggests that the average-maturity measure is a misleading indicator of the liquidity magnitude of maturity-composition changes in the government debt.
- Subjects
DEBT management; LIQUIDITY (Economics)
- Publication
Southern Economic Journal, 1968, Vol 34, Issue 4, p526
- ISSN
0038-4038
- Publication type
Article
- DOI
10.2307/1056930