Krishnamurthy and Vissing-Jørgensen (2012) investigate the aggregate demand for Treasury debt, focusing on the liquidity and safety attributes that drive investors' valuation of Treasury securities. They find that changes in Treasury supply have significant effects on yield spreads, with Treasury yields decreasing by an average of 73 basis points from 1926 to 2008. The study decomposes the Treasury convenience yield into liquidity and safety components, showing that both attributes are priced by investors. The results suggest that the government collects seigniorage from the liquidity and safety attributes of Treasury bonds, saving interest costs of about 0.25% of GDP per year. The findings also imply that Treasury interest rates should not be used as a benchmark for "riskless" rates in cost-of-capital computations, as companies with a beta of zero cannot raise funds at the Treasury rate. The study contributes to the literature on corporate bond pricing and the Ricardian equivalence proposition, providing empirical evidence that government debt has a causal effect on interest rates.Krishnamurthy and Vissing-Jørgensen (2012) investigate the aggregate demand for Treasury debt, focusing on the liquidity and safety attributes that drive investors' valuation of Treasury securities. They find that changes in Treasury supply have significant effects on yield spreads, with Treasury yields decreasing by an average of 73 basis points from 1926 to 2008. The study decomposes the Treasury convenience yield into liquidity and safety components, showing that both attributes are priced by investors. The results suggest that the government collects seigniorage from the liquidity and safety attributes of Treasury bonds, saving interest costs of about 0.25% of GDP per year. The findings also imply that Treasury interest rates should not be used as a benchmark for "riskless" rates in cost-of-capital computations, as companies with a beta of zero cannot raise funds at the Treasury rate. The study contributes to the literature on corporate bond pricing and the Ricardian equivalence proposition, providing empirical evidence that government debt has a causal effect on interest rates.