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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| Format: | Journal Article |
| Language: | English |
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2021
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| Online Access: | https://hdl.handle.net/10356/151242 |
| _version_ | 1811681048566693888 |
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| author | Kang, Minwook |
| author2 | School of Social Sciences |
| author_facet | School of Social Sciences Kang, Minwook |
| author_sort | Kang, Minwook |
| collection | NTU |
| 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. |
| first_indexed | 2024-10-01T03:34:45Z |
| format | Journal Article |
| id | ntu-10356/151242 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T03:34:45Z |
| publishDate | 2021 |
| record_format | dspace |
| spelling | ntu-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. |
| spellingShingle | Social sciences::Economic theory Inflation-indexed Bond Precautionary Motive Kang, Minwook Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives |
| title | 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_short | Inflation-indexed bonds and nominal bonds : financial innovation and precautionary motives |
| title_sort | inflation indexed bonds and nominal bonds financial innovation and precautionary motives |
| topic | Social sciences::Economic theory Inflation-indexed Bond Precautionary Motive |
| url | https://hdl.handle.net/10356/151242 |
| work_keys_str_mv | AT kangminwook inflationindexedbondsandnominalbondsfinancialinnovationandprecautionarymotives |