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Indexed bonds as an aid to monetary policy

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  • Robert L. Hetzel

Abstract

A measure of the publics expectation of inflation would assist the Fed in formulating monetary policy. In order to create such a measure, the U.S. Treasury could issue its debt in two forms: standard debt and debt indexed for inflation. The difference in yield on these two forms of debt would measure the publics expectation of inflation.

Suggested Citation

  • Robert L. Hetzel, 1992. "Indexed bonds as an aid to monetary policy," Economic Review, Federal Reserve Bank of Richmond, vol. 78(Jan), pages 13-23.
    • Handle: RePEc:fip:fedrer:y:1992:i:jan:p:13-23:n:v.78no.1
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    File URL: https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich199201.pdf
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    References listed on IDEAS

    as
    1. Joseph B. Grolnic & Alicia H. Munnell, 1986. "Should the U.S. government issue index bonds?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-21.
    2. Thomas M. Humphrey, 1974. "The concept of indexation in the history of economic thought," Economic Review, Federal Reserve Bank of Richmond, vol. 60(Nov), pages 1-16.
    3. Woodward, G Thomas, 1990. "The Real Thing: A Dynamic Profile of the Term Structure of Real Interest Rates and Inflation Expectations in the United Kingdom, 1982-89," The Journal of Business, University of Chicago Press, vol. 63(3), pages 373-398, July.
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    Cited by:

    1. Marvin Goodfriend, 1993. "Interest rate policy and the inflation scare problem: 1979-1992," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
    2. Andreas Reschreiter, 2010. "Indexed bonds and revisions of inflation expectations," Annals of Finance, Springer, vol. 6(4), pages 537-554, October.
    3. Thomas Mayer, 1998. "Indexed Bonds And Heterogeneous Agents," Contemporary Economic Policy, Western Economic Association International, vol. 16(1), pages 77-84, January.
    4. Soderlind, Paul & Svensson, Lars, 1997. "New techniques to extract market expectations from financial instruments," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 383-429, October.
    5. Ben Watt & Michael Reddell, 1997. "Some perspectives on inflation-indexed bonds," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 60, December.
    6. Robert L. Hetzel, 1993. "A quantity theory framework for monetary policy," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 35-48.
    7. Robert Darin & Robert L. Hetzel, 1995. "An empirical measure of the real rate of interest," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 17-47.
    8. Juan Angel Garcia & Adrian van Rixtel, 2007. "Inflation-linked bonds from a central bank perspective," Occasional Papers 0705, Banco de España.
    9. Bell, David N.F. & Levin, Eric J. & Wright, Robert E., 1997. "Indexed Bonds, Expected Inflation and Tax Clientele Bias," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(2), pages 315-320, June.
    10. Peter N. Ireland, 1996. "Long-term interest rates and inflation: a Fisherian approach," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 21-36.

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