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Growth-indexed bonds have been suggested as a way of reducing the procyclicality of emerging-market countries' fiscal policies and the likelihood of costly debt crises. Investor attitude surveys suggest that pricing difficulties are seen as a considerable obstacle. In an effort to reduce such concerns, this article presents a simple way of pricing growth-indexed bonds. As a pleasant by-product, the analysis tracks the quantitative implications of an increase in the share of growth-indexed bonds in total debt, measuring the ensuing decline in the probability of default and the reduction in the spreads at which standard bonds can be issued.

Bond market. --- Bonds -- Prices. --- Electronic books. -- local. --- Government securities -- Developing countries. --- Inflation-indexed bonds -- Developing countries. --- Exports and Imports --- Finance: General --- Investments: Bonds --- Macroeconomics --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Inflation --- Deflation --- International Lending and Debt Problems --- Investment & securities --- Finance --- International economics --- Bonds --- Emerging and frontier financial markets --- Inflation-indexed bonds --- Asset prices --- Foreign currency debt --- Financial services industry --- Prices --- Debts, External --- United States --- Government securities --- Prices.