The Rationale and Design of Inflation-Indexed Bonds

Robert Price

No 1997/012, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; indexed bond; risk premium; inflation expectation; secondary market; monetary policy; price level; supply price; cash flow; inflation risk premium; equilibrium price; yield gap; inflation compensation; inflation country; short-term debt; fixed price; coupon rate; Inflation-indexed bonds; Inflation; Bonds; Consumer price indexes; Return on investment; South America (search for similar items in EconPapers)
Pages: 69
Date: 1997-01-01
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Citations: View citations in EconPapers (25)

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