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The link between the United States' fiscal policy and institutional cash pools portfolio composition: A Stock-Flow consistent model

  • The 2007/08 Global Financial Crisis is commonly attributed to the increased practice of securitization by nonbank financial intermediaries. Part of the New-Keynesian and Money View literature has focused on the imbalances of supply and demand for safe liquid assets as a demand-side explanation for the surge of such institutions. The demand of Institutional Cash Pools has attracted particular interest. This master thesis studies to which extent fiscal deficits have an effect on the portfolio rebalancing of Institutional Cash Pools in the institutional framework implemented after the crisis in the United States, considering the appropriate changes in regulation, and policy framework for monetary and fiscal policy. The theoretical background is based on the Institutionalist Post-Keynesian economics, highlighting the hierarchy of promises to pay and the liquidity-preference theory of interest. Moreover, the effects in the size of institutional investors derived from a stock-flow consistent perspective are considered. For this purpose, I propose a stock-flow consistent model where the size and portfolio of institutional cash pools is endogenous and fiscal policy is determined by exogenous parameters. The results show that fiscal expansion unambiguously increases the size of Institutional Cash Pools, whilst the composition is ambiguously affected depending on the way fiscal expansion occurs and other distribution parameters.

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Metadaten
Author:Miquel Bassart i Loré
Referee:Tristan Auvray, Eckhard Hein, Mehmet Ülug
Advisor:Tristan Auvray, Eckhard Hein
Document Type:Master's Thesis
Language:English
Date of first Publication:2021/07/28
Publishing Institution:Hochschulbibliothek HWR Berlin
Granting Institution:Hochschule für Wirtschaft und Recht Berlin
Date of final exam:2021/07/13
Release Date:2021/09/20
Tag:Fiscal Policy; Institutional Cash Pools; Institutionalist Post-Keynesian economics; post-Global Financial Crisis institutional framework
Institutes:FB I - Wirtschaftswissenschaften / International Economics M.A.
Licence (German):License LogoUrheberrechtsschutz