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Govt On-BalanceSheet Fiscal Mechanics(Govt Assets)Govt Off-Balance SheetSpecial Purpose Entity(Non-Govt Assets)2. Production Agents2. Govt expendituresgovt.Gd -= govt.G # Fiscal space# Reserve add op.1. Opening debt before transactions this iteration:govt.GD_Open = govt.GD3. Pay interest on the bills heldby households and the central bank.1. Government Agent DomainGovt Assets (Bs)5. Issue bills: Calculate deficit and add to stock of bills. govt.GD_Change = govt.GD_Close - govt.GD_Open.# Add the change (+ve / -ve) to the stock of bills issued.govt.Bs += govt.GD_Change # Reserve subtract op.HealthEducationEnergyHousingTransportetc.3. HouseholdAgentsTypes4. Central Bank Agent:Lender / Market-Makerof Last Resort4. Treasury & debt office coordination.income = govt.Td # Money returned pure_expenditure = govt.Gdnet_interest = (govt.INT_Bcb - govt.Fcb) + govt.INT_Bhgovt.GD = income - (pure_expenditure + net_interest)govt.GD_Close = govt.GDEmployment& wages AlphaBetaGammaPay tax to govtPrivate Finance (PF) Agents:- Banks,- Corporations- Asset-Manager Global Savings- Money Market Funds- Private Equity- Hedge FundsConsumption demandsSavewealth(Bh)Save: (wealth - PF mgmnt fee) Profit on govt bills (Fcb)Partnership Infrastructure(PPP) Long-Term Contracts:Residual purchase billsLiquify fin. assetsSet rate on govt billsHealth, Education, EnergyPrison, Transport, etc.Mix of user fee& public serviceEligible CollateralFramework- PF Fin. AssetsLiquidity risk &market failureAssume demand / construction risk.Maintenance & service charges.PF InvestmentCashflowsGovt ManagedInfrastructureGovt Assets (Bcb)www.ModernMoney.studioPublicservicePF expenditureSecurities &new creditcreationInterest & dividendsSensitive to govt asset prices.(Velocity of govt asset (Bs) & int rate affect)Primary & Securities DealersREPURCHASE AGREEMENT(REPO) & FX SWAP MARKETSInfrastructure Context: Simple Sketch of Government Money Model (Blue) & Evolving Private Finance (Red)0. Govt tax obligationRW: Residual purchasevia primary dealersGovtPPP&IntrastructureRW: AuctionRW: Real-World