Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives

Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives

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 prec...

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Main Author: Kang, Minwook
Other Authors: School of Social Sciences
Format: Article
Language:English
Published: 2021
Subjects:
Social sciences::Economic theory
Inflation-indexed Bond
Precautionary Motive
Online Access:https://hdl.handle.net/10356/151242
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-1512422021-06-22T03:07:15Z Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives Kang, Minwook School of Social Sciences Social sciences::Economic theory Inflation-indexed Bond Precautionary Motive 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. 2021-06-22T03:07:14Z 2021-06-22T03:07:14Z 2019 Journal Article Kang, M. (2019). Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives. Journal of Money, Credit and Banking, 52(4), 721-745. https://dx.doi.org/10.1111/jmcb.12609 1538-4616 https://hdl.handle.net/10356/151242 10.1111/jmcb.12609 2-s2.0-85063647796 4 52 721 745 en Journal of Money, Credit and Banking © 2019 The Ohio State University. All rights reserved.
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic Social sciences::Economic theory
Inflation-indexed Bond
Precautionary Motive
spellingShingle Social sciences::Economic theory
Inflation-indexed Bond
Precautionary Motive
Kang, Minwook
Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
description 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.
author2 School of Social Sciences
author_facet School of Social Sciences
Kang, Minwook
format Article
author Kang, Minwook
author_sort Kang, Minwook
title Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
title_short Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
title_full Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
title_fullStr Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
title_full_unstemmed Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
title_sort inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives
publishDate 2021
url https://hdl.handle.net/10356/151242
_version_ 1703971169265254400

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