Managing the UK national debt 1694-2017

Mostra el registre complet Registre parcial de l'ítem

• dc.contributor.author Ellison, Martinca
• dc.contributor.author Scott, Andrewca
• dc.date.accessioned 2017-12-21T08:55:20Z
• dc.date.available 2017-12-21T08:55:20Z
• dc.date.issued 2017-09
• dc.description.abstract We construct a new monthly dataset for UK government debt over the period 1694 to 2017 based on price and quantity data for each individual bond issued. This enables us to examine long run fiscal sustainability using the theoretically relevant variable of the market value of debt, and investigate the historical importance of debt management. We find the general implications of the tax smoothing literature are replicated in our data, especially around financing wars, although we find major shifts over time in how fiscal sustainability is achieved. Before the 20th century, governments continued to pay bond holders a high rate of return and achieved sustainability through running fiscal surpluses but since then governments have relied on low growth adjusted real interest rates. The optimal debt management literature tends to favour the use of long bonds but we find the government would have been better off over the 20th century issuing short bonds. The contrast with the literature occurs because of an upward sloping yield curve and long bonds rarely providing fiscal insurance. This is particularly true during periods of financial crises when falling interest rates lead to sharp rises in the price of long bonds, making them an expensive form of finance. We examine the robustness of our conclusions to liquidity effects, rollover risks, buyback operations and leverage. In general, these do suggest a greater role for long bonds but do not overturn an issuance strategy based mainly on short term bonds.ca
• dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
• dc.format.mimetype application/pdfca
• dc.identifier.uri http://hdl.handle.net/10230/33548
• dc.language.iso engca
• dc.relation.ispartofseries ADEMU Working Paper Series;73
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
• dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
• dc.rights.accessRights info:eu-repo/semantics/openAccessca
• dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
• dc.subject.keyword Debt managementen
• dc.subject.keyword Fiscal deficitsen
• dc.subject.keyword Fiscal policyen
• dc.subject.keyword Government debten
• dc.subject.keyword Inflationen
• dc.subject.keyword Maturityen
• dc.subject.keyword Yield curveen
• dc.title Managing the UK national debt 1694-2017ca
• dc.type info:eu-repo/semantics/workingPaperca