This paper addresses the positive and normative implications of indexing risky debt to observable aggregate conditions. These issues are pursued within the context of the celebrated financial accelerator model of Bernanke, Gertler and Gilchrist (1999). The principal conclusions are that the optimal degree of indexation is significant, and that the business cycle properties of the model are altered under this level of indexation.Indexation (Economics) ; Financial markets

Charles T Carlstrom

Matthius Paustian

Timothy S Fuerst

Research Papers in Economics

English

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