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RobinHanson's avatar

The risk premia might be avoided if the auction were denominated in a risk asset, such as an S&P500 index fund.

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Fernando Nieto's avatar

The main problem I see with this scheme is that such tax-rights would be financial assets with a very long maturity, hence they would be very volatile in reaction to any policy changes. This could be an incentive to avoid the kind of changes affecting wages negatively, but it also implies that tax-rights can be expected to trade heavily discounted. The more uncertainty there is in a debt contract, the more costly it will be as an instrument to get funding. I'd say that's the reason for governments all around the globe to issue debt in USD (instead of local currency), or even TIPS in the US, but not so much century bonds or perpetuals. https://uploads.disquscdn.c...

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