The Safe Asset Frontier

16 Pages Posted: 28 Oct 2014

See all articles by Kartik Anand

Kartik Anand

Deutsche Bundesbank

Prasanna Gai

University of Auckland Business School; Australian National University (ANU); Bank of England

Multiple version iconThere are 2 versions of this paper

Date Written: August 27, 2014


We identify the frontier between safe and unsafe assets and show how the growth rate of the economy and its fiscal capacity interact with differences of opinion amongst investors to determine the safe asset equilibrium. Multiple equilibria emerge in our set-up due to strategic complementarities across counterparties, and the safety of the bond depends on the extent to which investors’ opinions diverge from the credit rating of the asset.

Keywords: Safe Assets, International Liquidity, Discrete Choice

JEL Classification: E44, D81, F02, F41, G15

Suggested Citation

Anand, Kartik and Gai, Prasanna, The Safe Asset Frontier (August 27, 2014). CIFR Paper No. 044/2014, Available at SSRN: or

Kartik Anand

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431


Prasanna Gai (Contact Author)

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom
+020 7601 3583 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics