Fiscal policy with noncontingent debt and the optimal maturity structure

George Marios Angeletos*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

91 Scopus citations


How should the tax rate and the level of public debt adjust to an adverse fiscal shock? What is the optimal maturity structure of public debt? If the maturity structure is carefully chosen, the ex post variation in the market value of public debt can cover the government against the need to raise taxes or debt if fiscal conditions should turn bad. In general, almost every Arrow-Debreu allocation can be implemented with noncontingent debt of different maturities. In a stylized example, the optimal policy is implemented by selling a perpetuity and investing in a short-term asset.

Original languageEnglish (US)
Pages (from-to)1105-1131
Number of pages27
JournalQuarterly Journal of Economics
Issue number3
StatePublished - Aug 2002

ASJC Scopus subject areas

  • Economics and Econometrics


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