Bond Indexation and Exhaustible Resources and Depletion

Howard Kaufold

Rodney L. White Center for Financial Research Working Papers from Wharton School Rodney L. White Center for Financial Research

Abstract: In this paper it is shown that an exhaustible resource owner’s supply response to the offer of an indexed bond depends on the correlation between the relative price of the resource and the price to which the bond contract is indexed. The indexed bond encourages current extraction only if this correlation is weak; a strong (positive or negative) correlation implies that the availability of the indexed bond discourages current production. This result is then explained in terms of two distinct and sometimes competing insurance effects generated by the indexed bond offer.

References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:pennfi:01-83

Access Statistics for this paper

More papers in Rodney L. White Center for Financial Research Working Papers from Wharton School Rodney L. White Center for Financial Research Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().