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

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Author Info
Jennifer Roush
William Dudley
Michelle Steinberg Ezer
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.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 353.

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Date of creation: 2008
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Handle: RePEc:fip:fednsr:353

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Related research
Keywords: Treasury bonds ; Government securities ; Inflation risk ; Liquidity (Economics);

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  1. John Y. Campbell & Robert J. Shiller & Luis M. Viceira, 2009. "Understanding Inflation-Indexed Bond Markets," NBER Working Papers 15014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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