The Invention of Inflation-Indexed Bonds in Early America
The world is first known inflation-indexed bonds were issued by the Commonwealth of Massachusetts in 1780 during the Revolutionary War. These bonds were invented to deal with severe wartime inflation and with angry discontent among soldiers in the U.S. Army with the decline in purchasing power of their pay. Although the bonds were successful, the concept of indexed bonds was abandoned after the immediate extreme inflationary environment passed, and largely forgotten until the twentieth century. In 1780, the bonds were viewed as at best only an irregular expedient, since there was no formulated economic theory to justify indexation.
|Date of creation:||Oct 2003|
|Publication status:||Published in William N. Goetzmann and Geert K. Rouwenhorst, editors, The Origins of Value: The Financial Innovations that Created Modern Capital Markets Oxford: Oxford University Press, 2005|
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert J. Shiller, 1991. "Arithmetic Repeat Sales Price Estimators," Cowles Foundation Discussion Papers 971, Cowles Foundation for Research in Economics, Yale University.
- 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.
- John Y. Campbell & Robert J. Shiller, 1996. "A Scorecard for Indexed Government Debt," NBER Working Papers 5587, National Bureau of Economic Research, Inc.
- John Y. Campbell & Robert J. Shiller, 1996. "A Scorecard for Indexed Government Debt," Cowles Foundation Discussion Papers 1125, Cowles Foundation for Research in Economics, Yale University.
- Willard C. Fisher, 1913. "The Tabular Standard in Massachusetts History," The Quarterly Journal of Economics, Oxford University Press, vol. 27(3), pages 417-454. Full references (including those not matched with items on IDEAS)