The case for TIPS: an examination of the costs and benefits

Jennifer Roush, William Dudley and Michelle Steinberg Ezer

No 353, Staff Reports from Federal Reserve Bank of New York

Abstract: Several studies have shown that, ex-post, the issuance of Treasury Inflation-Protected Securities (TIPS) has cost U.S. taxpayers money. We propose that evaluations of the TIPS program be more comprehensive and focus on the ex-ante costs of TIPS issuance versus nominal Treasury issuance and, especially when these costs are negligible, the more difficult-to-measure benefits of the program. Our study finds that the ex-ante costs of TIPS issuance versus nominal Treasury issuance are currently about equal and that TIPS provide meaningful benefits to investors and policymakers.

Keywords: Treasury bonds; Government securities; Inflation risk; Liquidity (Economics) (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk and nep-mac
Date: 2008
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