The Secular Decrease in UK Safe Asset Market Power

We document the decline in market power of the U.K. in safe assets and quantify the resulting losses. We estimate an increasing elasticity of demand for U.K. public debt during the latter half of the 20th century. This is in sharp contrast to the U.S., which displays the opposite pattern with decreasing elasticities of demand during this time. We argue that the decline in market power of the U.K. in safe assets resulted in a sizable decline in seigniorage revenues.