How do debt managers decide about the maturity of new public debt?
Typical debt management objectives include:
economic stabilization and tax smoothing, and
adjusting to investor preferences.
These objectives cannot be all achieved simultaneously. Theoretical models from the normative literature point to (2) tax smoothing as the optimal strategy. Yet due to scarcity of empirical research, it is not clear whether that is what debt managers actually follow. In this positivist panel data analysis, I operationalize various strategies and apply the system GMM approach. Preliminary findings are that in 1980-2010, OECD debt managers have primarily followed strategies (1) and (3), in contrast to theoretical literature.