GDP-linked bonds unlikely to ‘tame debt’ – BdF paper

banque-de-france

A working paper published by the Banque de France examines the idea of indexing sovereign debt to GDP.

In Debt-stabilising properties of GDP-linked securities: a macro-finance perspective, Sarah Mouabbi, Jean-Paul Renne and Jean-Guillaume Sahuc note that some policy analysts have advocated such a policy.

“By issuing state-contingent debt instruments, the government’s burden of servicing its debt is higher in periods of strong economic growth, while payments are reduced in periods of economic

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