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Volume 53, March/April 2018, Number 2 · pp. 94-100


The Supply of Safe Assets and Fiscal Policy

Ludger Schuknecht

Beyond fleeting references, there is surprisingly little analysis about the interrelationship between fiscal policy and safe assets. This study analyses this interrelationship and argues that, at a certain point, more public debt will not “buy” more safety: countries face a kind of “safe assets Laffer curve”, with a maximum amount of safe assets at some level of indebtedness. The position and stability of this curve depend on a number of national and international factors, including international risk appetite and the quantitative easing policies implemented by central banks. The study also finds evidence of declining safe assets, as reflected in government debt ratings.


This Intereconomics article is available for free at this page after an embargo period of two years. Reading it before April 2020 is possible via SpringerLink or in the next library.