Working Paper: NBER ID: w31180
Authors: Jason Choi; Duong Q. Dang; Rishabh Kirpalani; Diego J. Perez
Abstract: We document the decline in market power of the U.K. in safe assets and quantify the resulting losses. We estimate an increasing elasticity of demand for U.K. public debt during the latter half of the 20th century. This is in sharp contrast to the U.S., which displays the opposite pattern with decreasing elasticities of demand during this time. We argue that the decline in market power of the U.K. in safe assets resulted in a sizable decline in seigniorage revenues.
Keywords: safe assets; market power; UK public debt; seigniorage
JEL Codes: E0; F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in elasticity of demand for UK public debt (H69) | Decline in market power of the UK in safe assets (F65) |
| Decline in market power of the UK in safe assets (F65) | Decline in seigniorage revenues (H69) |
| Increase in elasticity of demand for UK public debt (H69) | Decline in seigniorage revenues (H69) |