The Invention of Inflation-Indexed Bonds in Early America / Robert J. Shiller.

By:

Shiller, Robert J

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w10183.Publication details: Cambridge, Mass. National Bureau of Economic Research 2003.Description: 1 online resource: illustrations (black and white)Subject(s):

E31 - Price Level • Inflation • Deflation

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: The world's first known inflation-indexed bonds were issued by the Commonwealth of Massachusetts in 1780 during the Revolutionary War. These bonds were invented to deal with severe wartime inflation and with angry discontent among soldiers in the U.S. Army with the decline in purchasing power of their pay. Although the bonds were successful, the concept of indexed bonds was abandoned after the immediate extreme inflationary environment passed, and largely forgotten until the twentieth century. In 1780, the bonds were viewed as at best only an irregular expedient, since there was no formulated economic theory to justify indexation.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w10183 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w10180 Choosing Between Peace and War /	nber w10181 Assessing the Benefits to Developing Countries of Liberalization in Services Trade /	nber w10182 The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands /	nber w10183 The Invention of Inflation-Indexed Bonds in Early America /	nber w10184 Risk Management, Capital Budgeting and Capital Structure Policy for Insurers and Reinsurers /	nber w10185 What You Don't Know Can't Help You: Pension Knowledge and Retirement Decision Making /	nber w10186 Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch? /	Next

December 2003.

The world's first known inflation-indexed bonds were issued by the Commonwealth of Massachusetts in 1780 during the Revolutionary War. These bonds were invented to deal with severe wartime inflation and with angry discontent among soldiers in the U.S. Army with the decline in purchasing power of their pay. Although the bonds were successful, the concept of indexed bonds was abandoned after the immediate extreme inflationary environment passed, and largely forgotten until the twentieth century. In 1780, the bonds were viewed as at best only an irregular expedient, since there was no formulated economic theory to justify indexation.