There has been increasing interest in exploring financial instruments that could limit the cyclical vulnerabilities of developing countries and reduce the likelihood of defaults and debt crises. GDP-indexed bonds fall into this category and may also generate a wider range of benefits for issuer countries, investors and the global financial system. The authors also examine the concerns and obstacles relating to the introduction of this instrument, suggesting that some may be exaggerated while others could be overcome. The paper calls for international public action to help develop markets for GDP-linked bonds and proposes a number of actions, some of which would require collaboration between Governments, multilateral development banks and the private sector.
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Paper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number
21.
Find related papers by JEL classification: F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements F30 - International Economics - - International Finance - - - General G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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