COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1717 The Case for Trills: Mark Kamstra and Robert J. Shiller August 2009 We make the case for the U.S. government to issue a new security with a coupon tied to
the United States’ current dollar GDP. This security might pay, for example, a coupon
of one-trillionth of the GDP, and we propose the name "Trill" be used to refer
to this new security. This new debt instrument should be of great interest to the
Government for its stabilizing influence on the budget (as coupon payments fall in a
recession with declining tax revenues) and for its yield, based on our valuation. Standard
asset pricing analysis also suggests that Trills would enable important new portfolio
diversification strategies and, in contrast to available assets that protect relative
standards of living in retirement, Trills would have virtually no counterparty risk. We
believe there would be a lively appetite for the Trill from institutional investors,
public and private pension funds, as well as the individual investor. |
