Economic Review

1992

 
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Jan/Feb, 1992

Indexed Bonds as an Aid to Monetary Policy

Robert L. Hetzel

A measure of the public’s expectation of inflation would assist the Fed in formulating monetary policy. In order to create such a measure, the U.S. Treasury could issue its debt in two forms: standard debt and debt indexed for inflation. The difference in yield on these two forms of debt would measure the public’s expectation of inflation.

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