{"product_id":"9781455294183","title":"Reviving the Case for GDP-Indexed Bonds","description":"This paper seeks to revive the case for countries to self-insure against economic growth slowdowns by issuing GDP-indexed bonds. We simulate the effects of GDP-indexed bonds under different assumptions about fiscal policy reaction functions and their output effects and find that they could substantially reduce the likelihood that debt\/GDP paths become explosive. The insurance premium would likely be small, because cross-country comovement of GDP growth rates is low and cross-country GDP growth risk is thus largely diversifiable for an investor holding a portfolio of GDP-indexed bonds. Potential obstacles to the emergence of a market for these bonds include the verifiability of GDP data, the trade-off between insurance and moral hazard, and the need for liquidity. The paper discusses institutional fixes and suggests an approach to attempting to start up a market.","brand":"INTERNATIONAL MONETARY FUND","offers":[{"title":"Default Title","offer_id":47124275822832,"sku":"9781455294183","price":5.0,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0737\/7593\/9824\/files\/9781455294183_p0.jpg?v=1763851426","url":"https:\/\/shop-qa.barnesandnoble.com\/products\/9781455294183","provider":"Barnes \u0026 Noble (DEV)","version":"1.0","type":"link"}