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Governance of Crown Financial Assets

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Abstract

This paper investigates the agency problems associated with the public management of a large financial asset portfolio. After considering the relevant theoretical and empirical literature, a set of institutional arrangements are presented that should reduce the extent of the potential agency problems faced. Key design features include: mechanisms for enhancing policy credibility; the use of existing market mechanisms and regulation where possible; and the creation of a public-sector institution to perform administrative functions. The paper does not consider the issues of optimal fiscal policy, or the appropriate risk tolerance for the Crown, although the conclusions drawn from this study may contribute to these debates.

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  • Nick Davis, 1998. "Governance of Crown Financial Assets," Treasury Working Paper Series 98/02, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:98/02
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    File URL: https://treasury.govt.nz/sites/default/files/2018-01/twp98-02.pdf
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    References listed on IDEAS

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    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Mitchell, Olivia S., 1993. "Publicpension governance and performance : lessons for developing countries," Policy Research Working Paper Series 1199, The World Bank.
    3. Josef Lakonishok & Andrei Shleifer & Robert W. Vishny, 1992. "The Structure and Performance of the Money Management Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992 Micr), pages 339-391.
    4. Oliver E. Williamson & Scott E. Masten (ed.), 1995. "Transaction Cost Economics," Books, Edward Elgar Publishing, volume 0, number 594.
    5. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
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    Cited by:

    1. Nick Davis & Richard Fabling, 2002. "Population Ageing and the Efficiency of Fiscal Policy in New Zealand," Treasury Working Paper Series 02/11, New Zealand Treasury.
    2. Nick Davis, 2001. "Does Crown Financial Portfolio Composition Matter?," Treasury Working Paper Series 01/34, New Zealand Treasury.
    3. André Amante & Phillip Anderson & Thordur Jonasson & Herman Kamil & Mr. Michael G. Papaioannou, 2019. "Sovereign Asset and Liability Management in Emerging Market Countries: The Case of Uruguay," IMF Working Papers 2019/290, International Monetary Fund.

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