Treasury Debt Operations: An Analysis Integrating Social Fabric Matrix and Social Accounting Matrix Methodologies

Abstract

The self-imposed constraint requiring the U. S. Treasury to have a positive balance in its account prior to spending combined with the Federal Reserve's desire to achieve its federal funds rate target result in six transactions being necessary when the U. S. Federal Government runs a deficit. This paper explains these six transactions by combining the Social Fabric Matrix and Social Accounting Matrix methodologies.

Keywords: treasury debt operations, central bank operations, interest rate targets, budget deficits, social accounting matrix, social fabric matrix

JEL Classification: B41, E42, E44, E52, E62, H63