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The procyclicality of inflation-linked debt

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  • Pintér, Gábor

Abstract

The share of inflation-linked debt in total public debt is procyclical in the UK and US. Controlling for breakeven inflation, the linker share is positively related to inflation. Tax-smoothing incentives of the government in a Ramsey model can explain this.

Suggested Citation

  • Pintér, Gábor, 2022. "The procyclicality of inflation-linked debt," Economics Letters, Elsevier, vol. 218(C).
    • Handle: RePEc:eee:ecolet:v:218:y:2022:i:c:s0165176522002415
    DOI: 10.1016/j.econlet.2022.110706
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    More about this item

    Keywords

    Government debt portfolio; Optimal fiscal policy; Inflation-linked bonds;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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