The Rationale and Design of Inflation-Indexed Bonds
January 1, 1997
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Summary
A number of industrialized countries have recently offered inflation-indexed bonds. Some members of another group of countries that had earlier adopted more comprehensive indexation in response to high inflation have taken steps to reduce the scope of indexation in their economies. This paper surveys debt management, monetary policy, and welfare arguments on the use of inflation-indexed bonds, and relates these to the experiences of various issuers. The paper also considers some important design features of indexed bonds.
Subject: Bonds, Consumer price indexes, Financial institutions, Inflation, Inflation-indexed bonds, National accounts, Prices, Return on investment
Keywords: Bonds, cash flow, Consumer price indexes, coupon rate, equilibrium price, fixed price, indexed bond, Inflation, inflation compensation, inflation country, inflation expectation, inflation risk premium, Inflation-indexed bonds, monetary policy, price level, Return on investment, risk premium, secondary market, short-term debt, South America, supply price, WP, yield gap
Pages:
69
Volume:
1997
DOI:
Issue:
012
Series:
Working Paper No. 1997/012
Stock No:
WPIEA0121997
ISBN:
9781451842869
ISSN:
1018-5941
