Description:

Speaker: Takaaki Sagawa

Title: The Macroeconomics of the US Funding Advantage

Abstract: I study the macroeconomic effects and transmission channels of shocks to the U.S. funding advantage, defined as the spread between private safe-asset yields and Treasuries. Using a max-share identification approach, I find that increases in the funding advantage raise U.S. debt levels and output. The effects operate through a gradual balance-sheet reallocation toward Treasuries and a decline in Treasury beta, consistent with a bank-regulation and safe-asset demand channel that sustains low government funding costs.