The Secular Decrease in UK Safe Asset Market Power
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 120-24)
Abstract
We document the decline in market power of the United Kingdom in safe assets and quantify the resulting losses. We estimate an increasing elasticity of demand for UK public debt during the latter half of the twentieth century. This is in sharp contrast to the United States, which displays the opposite pattern with decreasing elasticities of demand during this time. We argue that the decline in market power of the United Kingdom in safe assets resulted in a sizable decline in seigniorage revenues.Citation
Choi, Jason, Duong Dang, Rishabh Kirpalani, and Diego J. Perez. 2023. "The Secular Decrease in UK Safe Asset Market Power." AEA Papers and Proceedings, 113: 120-24. DOI: 10.1257/pandp.20231002Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E43 Interest Rates: Determination, Term Structure, and Effects
- F34 International Lending and Debt Problems
- G12 Asset Pricing; Trading Volume; Bond Interest Rates
- N24 Economic History: Financial Markets and Institutions: Europe: 1913-