Abstract
The People’s Republic of China introduced indexed government bonds in the face of the inflation panic of 1988–89 and reintroduced them when inflation surged upward again in 1993. Measures of inflation expectations—as derived from the trading prices of these indexed bonds—suggest that the government gained credibility from its ability to contain inflation in 1989. But the government’s failure to quickly halt the 1993–95 inflation led, by late 1994, to soaring inflation expectations and, ultimately, a heavy financial penalty for the government as the 1992 and 1993 bond issues matured while inflation was still high.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
