Explaining Fluctuations in the Thrift Savings Fund Daily Balance at U.S. Treasury

47 Pages Posted: 24 May 2021

See all articles by Mark Skidmore

Mark Skidmore

Michigan State University - Department of Agricultural Economics

Camila Alvayay Torrejón

Michigan State University

David Pare

Independent

Date Written: 2021

Abstract

In this paper we document and examine unusual fluctuations in the G-Fund, which is one of five funds available in a voluntary federal government employee retirement savings vehicle called the Thrift Savings Plan. The G-Fund is managed as “internally” held debt by the United States Department of Treasury. Our examination highlights two obscure facts about the G-Fund: 1) The fund is exclusively composed of one-day notes that Treasury redeems and reissues every business day. The daily turnover of the G-Fund results in about $55 trillion in debt reissuance annually; and 2) whenever the federal government is constrained by a debt ceiling, the G-Fund balance drops dramatically and typically does not return to pre-constraint balance levels until the debt ceiling is either expanded or suspended. We document these patterns and ask whether the G-Fund is managed in a way the represents the best interests of the fund contributors.

JEL Classification: G230, H230, H550

Suggested Citation

Skidmore, Mark L. and Torrejón, Camila Alvayay and Pare, David, Explaining Fluctuations in the Thrift Savings Fund Daily Balance at U.S. Treasury (2021). CESifo Working Paper No. 9084, Available at SSRN: https://ssrn.com/abstract=3849862 or http://dx.doi.org/10.2139/ssrn.3849862

Mark L. Skidmore (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

Camila Alvayay Torrejón

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

David Pare

Independent

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