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Do You Want an Extended Warranty with That?
Before buying an extended warranty or a service contract for your home, a car, or an appliance, be sure to read the fine print and weigh the costs and benefits.
Working Paper
German Inflation-Linked Bonds: Overpriced, Yet Undervalued
We document that German inflation-linked government bond yields contain a convenience or safety premium averaging 0.33 percent. Despite that, the German Federal Finance Agency decided to cease all future issuance of these bonds in November 2023. We examine the market response to this announcement and find that neither the safety premia nor the trading conditions of these bonds have been negatively impacted. Hence, this bond market remains a rich source of information on real rates in the euro area in addition to offering investors a safe inflation-protected asset.