13:00 horas, Sala Asamblea, 4to piso, Torre Ingeniería Industrial (Beauchef 851, Santiago)
El Centro de Economía Aplicada (CEA) y el Instituto Milenio para la Investigación en Imperfecciones de Mercado y Políticas Públicas (MIPP) de la Universidad de Chile invitan a su ciclo de seminarios programados para el primer semestre del año.
Invitado: Sebastián Infante, Federal Board
“Private Money Creation with Safe Assets and Term Premia”
It has been documented that an increase in the demand for safe assets induces the private sector to create more money-like claims. Focusing on private repos backed by U.S. Treasury securities, I show that an increase in the demand for safe assets leads to a decreases in the issuance of Treasury repos. The intuition is that Treasury securities already function as a safe asset, thus in terms of safe asset creation, private Treasury repos are neutral. In the model, Treasury repos are beneficial because they shift risk (i.e. term premia) from relatively risk averse households to a more risk tolerant financial sector, which issues repos to finance its portfolio. When the demand for safe assets increases, Treasury securities are reallocated to households, reducing the amount of Treasury repo issued by the financial sector. By contrast, Treasury repos created by the Federal Reserve’s RRP program -a safe asset created by the public sector- increase with the demand for safe assets. I show the data supports the model’s main predictions.
Más información: Olga Barrera / firstname.lastname@example.org