TY  - JOUR
AU  - Roley,V. Vance
TI  - Asset Substitutability and the Impact of Federal Deficits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1082
PY  - 1983
Y2  - February 1983
UR  - http://www.nber.org/papers/w1082
L1  - http://www.nber.org/papers/w1082.pdf
N1  - Author contact info:
V. Vance Roley
Department of Finance/DJ-10
Graduate School of Business
University of Washington
Seattle, WA  98195
Tel: 206/545-7476
E-Mail: vroley@u.washington.edu
AB  - In this paper, the role of asset substitutability in determining the impact of debt-financed federal deficits is examined. The issues are first discussed in the context of a simple analytical model in which financial assets are disaggregated into money, federal debt,and corporate bonds. In this model, it is shown that depending on the degree of substitutability among financial assets, a range of possible outcomes associated with a change in the federal deficit is possible.Next, the issue of asset substitutability is examine dempirically in a disaggregated structural model of the Treasury security,corporate bond, and equity markets. Using this model, the implications of larger debt-financed federal deficits are then examined in a series of simulation experiments.
ER  -