tag:blogger.com,1999:blog-582368152716771238.post6401929898458245983..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: Floating-rate Treasury Debt?John H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-582368152716771238.post-49868922334958588632012-05-07T10:19:25.149-05:002012-05-07T10:19:25.149-05:00Isn't there a transactions cost to rolling ove...Isn't there a transactions cost to rolling over debt? I imagine a lot of investors want really really safe bonds (in terms of principal) including safety from interest rate changes. Now, all they can do is roll over short-term debt every day. It seems a lot more convenient to hold a perpetuity that has a constant market price (but with a varying yield).Eric Rasmusenhttps://www.blogger.com/profile/01609599580545475695noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-91846541316688481352012-05-02T08:29:07.623-05:002012-05-02T08:29:07.623-05:00Prof. Cochrane,
The US economy has the advantage ...Prof. Cochrane,<br /><br />The US economy has the advantage of having its titles defined as risk free, which means that if there is an increment in the risk of the T-Bill, people will buy more T-Bill's in order to balance the risk of their portfolio. It seems to me that this is somewhat behind your view about this movement of the government. <br /><br />What is troubling me in this issue is that in the developing world, specialy Brazil, there is a huge movement in the oposite direction based on the preception that post fixed interest rates tend to increase the strenght of "croud effect" ("manada efect" in english?) during crisis of confidence? What is your view on this issue?Eduardo Weiszhttps://www.blogger.com/profile/03047849830283545090noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36928256496713769152012-05-02T04:37:24.293-05:002012-05-02T04:37:24.293-05:00I'm not entirely sure I follow your second lin...I'm not entirely sure I follow your second line of reasoning: won't the investments by money market funds still be illiquid, even if they're investing in floating rate bonds? Because then, the demand for liquid assets argument in favor of deposits still seems to hold. What am I missing here?Mark Dijkstrahttps://www.blogger.com/profile/06024537346795617009noreply@blogger.com