On Indexed Bonds and Aggregate Demand Elasticity
Document Type
Article
Publication Date
2009
Abstract
Bonds indexed to the price level or inflation have become popular and more common in the industrialized world. This paper examines the impact of indexed bonds on the price level elasticity of aggregate demand. With a model of aggregate demand based on the standard IS-LM framework and expanded to differentiate between bonds which are indexed to the price level and bonds which are not so indexed, we find that the existence of indexed bonds decreases the elasticity of aggregate demand with respect to the general price level.
DOI
https://doi.org/10.1007/s11293-008-9151-9
Publication Information
Kyer, Ben L. and Maggs, Gary E. (2009). "On Indexed Bonds and Aggregate Demand Elasticity." Atlantic Economic Journal 37, 17-21.
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