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Policy Watch: The Introduction of Indexed Government Debt in the United States


  • David W. Wilcox


This article describes the early phases of the development of the market for indexed government debt in the United States. The first such bonds were issued in 1997--one set with a maturity of ten years, the other with a maturity of five years. In the wake of the Treasury issuance, several non-Treasury borrowers have issued indexed debt and several new index-linked products for retail customers have been introduced. As expected, the new indexed notes have 'outperformed' conventional nominal notes in the secondary markets for Treasury debt when bad news has become available about inflation and conversely.

Suggested Citation

  • David W. Wilcox, 1998. "Policy Watch: The Introduction of Indexed Government Debt in the United States," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 219-227, Winter.
  • Handle: RePEc:aea:jecper:v:12:y:1998:i:1:p:219-27 Note: DOI: 10.1257/jep.12.1.219

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    References listed on IDEAS

    1. David Barr & John Campbell, "undated". "Inflation, real interest rates and the bond market: a study of UK nominal and index-linked Government bond prices," CERF Discussion Paper Series 95-09, Economics and Finance Section, School of Social Sciences, Brunel University.
    2. Mark Fisher & Douglas Nychka & David Zervos, 1995. "Fitting the term structure of interest rates with smoothing splines," Finance and Economics Discussion Series 95-1, Board of Governors of the Federal Reserve System (U.S.).
    3. Brown, Roger H. & Schaefer, Stephen M., 1994. "The term structure of real interest rates and the Cox, Ingersoll, and Ross model," Journal of Financial Economics, Elsevier, vol. 35(1), pages 3-42, February.
    4. John Y. Campbell & Robert J. Shiller, 1996. "A Scorecard for Indexed Government Data," Harvard Institute of Economic Research Working Papers 1758, Harvard - Institute of Economic Research.
    5. John Y. Campbell & Robert J. Shiller, 1996. "A Scorecard for Indexed Government Debt," NBER Chapters,in: NBER Macroeconomics Annual 1996, Volume 11, pages 155-208 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bar-Ilan, Avner & Seidmann, Daniel J., 2006. "Endogenous contract structure and monetary policy," European Economic Review, Elsevier, vol. 50(4), pages 1043-1060, May.
    2. Brian P. Sack & Robert Elsasser, 2004. "Treasury inflation-indexed debt: a review of the U.S. experience," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 47-63.
    3. Peters, David W., 2007. "The behavior of government of Canada real return bond returns," International Review of Financial Analysis, Elsevier, vol. 16(2), pages 152-171.

    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation


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