Staff Reports
The Case for TIPS: An Examination of the Costs and Benefits
October 2008 Number 353
JEL classification: H63, G10, E6

Authors: Jennifer Roush, William Dudley, and Michelle Steinberg Ezer

Several studies have shown that, ex-post, the issuance of Treasury Inflation-Protected Securities (TIPS) has cost U.S. taxpayers money. We propose that evaluations of the TIPS program be more comprehensive and focus on the ex-ante costs of TIPS issuance versus nominal Treasury issuance and, especially when these costs are negligible, the more difficult-to-measure benefits of the program. Our study finds that the ex-ante costs of TIPS issuance versus nominal Treasury issuance are currently about equal and that TIPS provide meaningful benefits to investors and policymakers.

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