A key property of the Aiyagari-type heterogeneous-agent models is that equilibrium interest rate public debt lies below time discount rate. This fundamental property, however, implies Ramsey planner’s fiscal policy may be time-inconsistent because forward-looking planner would have a dominant incentive to issue plenty such all households are fully self-insured against idiosyncratic risk. But fu...

‎In this paper‎, ‎we consider the optimal asset control of a financial company which can control its liquid reserves by paying dividends and by issuing new equity‎. ‎We assume that the liquid surplus of the company in the absence of control is modeled by the diffusion model‎. ‎It is a hot topic to maximize the expected present value of dividends payout minus equity issuance until the time of ba...