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Inflation-linked bonds from a central bank perspective

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  • Juan Angel Garcia

    () (Europena Central Bank)

  • Adrian van Rixtel

    () (Banco de España)

Abstract

Inflation-linked bond markets have experienced significant growth in recent years. This growth is somewhat surprising, for inflation-linked bonds cannot be considered a financial innovation and their development has taken place in a period of historically low global inflation and inflation expectations. In this context, the purpose of this paper is twofold. First, it provides a selective survey of the key arguments for and against the issuance of inflation-linked debt, and some of the factors that help to understand their recent growth. Second, it illustrates the use of these instruments to better monitor investors’ inflation expectations and growth prospects from a central bank perspective.

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File URL: http://www.bde.es/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/07/Fic/do0705e.pdf
File Function: First version, August 2007
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Bibliographic Info

Paper provided by Banco de España in its series Banco de España Occasional Papers with number 0705.

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Length: 45 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:bde:opaper:0705

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Keywords: central banks; monetary policy; inflation-linked bonds; break-even inflation rates;

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Citations

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Cited by:
  1. Klaus Masuch & Ramon Gómez-Salvador & Nadine Leiner-Killinger & Rolf Strauch & Jarkko Turunen & Melanie Ward-Warmedinger & Jan De Mulder & Harald Stahl & Yvonne McCarthy & Daphne Nicolitsas & Aitor L, 2008. "Labour supply and employment in the euro area countries - developments and challenges," Occasional Paper Series 87, European Central Bank.
  2. Kajuth, Florian & Watzka, Sebastian, 2011. "Inflation expectations from index-linked bonds: Correcting for liquidity and inflation risk premia," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(3), pages 225-235, June.
  3. Juan Angel García & Thomas Werner, 2010. "Inflation risks and inflation risk premia," Working Paper Series 1162, European Central Bank.
  4. Alessandro Missale, 2012. "Sovereign debt management and fiscal vulnerabilities," BIS Papers chapters, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 157-176 Bank for International Settlements.
  5. Philippe Bergevin & William B.P. Robson, 2012. "More RRBs, Please! Why Ottawa Should Issue More Inflation-Indexed Bonds," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 363, September.
  6. Fulli-Lemaire, Nicolas, 2012. "Alternative Inflation Hedging Portfolio Strategies: Going Forward Under Immoderate Macroeconomics," MPRA Paper 42854, University Library of Munich, Germany.
  7. Jacob Ejsing & Juan Angel García & Thomas Werner, 2007. "The term structure of euro area break-even inflation rates - the impact of seasonality," Working Paper Series 830, European Central Bank.
  8. Matteo Ciccarelli & Juan Angel García, 2009. "What drives euro area break-even inflation rates?," Working Paper Series 996, European Central Bank.
  9. Geert Bekaert & Xiaozheng Wang, 2010. "Inflation risk and the inflation risk premium," Economic Policy, CEPR & CES & MSH, vol. 25, pages 755-806, October.
  10. Renne, J-P., 2009. "Frequency-domain analysis of debt service in a macro-finance model for the euro area," Working papers 261, Banque de France.

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