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Title: Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
Authors: Kang, Minwook
Keywords: Social sciences::Economic theory
Issue Date: 2019
Source: Kang, M. (2019). Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives. Journal of Money, Credit and Banking, 52(4), 721-745.
Journal: Journal of Money, Credit and Banking
Abstract: This paper introduces a two-period monetary general equilibrium model with proportional transaction costs on nominal and inflation-indexed bonds. This paper demonstrates that financial innovation on indexed bonds causes equilibrium interest rates of the nominal bond to increase when agents have precautionary saving motives. This result implies that ignoring precautionary motives would underestimate savers' welfare gain and overestimate borrowers' welfare gain from innovation on indexed bonds.
ISSN: 1538-4616
DOI: 10.1111/jmcb.12609
Rights: © 2019 The Ohio State University. All rights reserved.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:SSS Journal Articles

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