GDP-linked bonds and economic growth

Kalamov, Z. Y., & Zimmermann, K. J. (2023). GDP-linked bonds and economic growth. Journal of international money and finance, 137 (2023). https://doi.org/10.60810/openumwelt-1899

Zusammenfassung englisch

We analyze the implications of introducing GDP-linked bonds for economic growth. First, we model a stochastically growing small open economy. The government borrows from the international financial market, collects tax revenue, and provides a public infrastructure good. Sovereign debt may be both conventional and indexed to GDP. Second, we calibrate the model for a developing country. The introduction of GDP-linked bonds increases the optimal debt-to-GDP ratio, public-to-private capital ratio, and tax rate. It also exerts a small negative effect on the mean GDP growth rate as well as a small positive welfare impact. © 2023 Elsevier Ltd. All rights reserved.