standard New-Keynesian model, and may even inflate the equity premium. Second, asset-price movements improve the inflation …-output trade-off so that average output can rise without increasing much average inflation. Finally, a strict inflation …-targeting policy may result in lower average welfare than a more flexible inflation-targeting policy, which instead increases the …

inflation targeting (IT) affects spreads. It is hypothesized that country risk premia for IT countries (especially among …-term inflation. The findings suggest that IT reduces the risk premium, both through adoption of the IT regime, and through the … observed track record in stabilizing inflation …

properties of the yield curve when inflation is an exogenous process and compare this to the yield curve when inflation is … endogenous and determined through an interest-rate/Taylor rule. When inflation is exogenous, it is difficult to match the shape … with exogenous inflation does not exhibit any negative autocorrelation - a necessary condition for an upward sloping yield …