A measure of the public's expectation of inflation would assist the Fed in formulating monetary policy. In order to … create such a measure, the U.S. Treasury could issue its debt in two forms: standard debt and debt indexed for inflation. The … difference in yield on these two forms of debt would measure the public's expectation of inflation …

servicing her other debt. This paper presents unique empirical evidence of selective default risk premium in inflation …-linked sovereign bond (ILB) yields of Germany, France and Italy. I identify this effect from the difference of breakeven rates from … country pairs. Differencing controls for common components, such as the effect of inflation expectations, monetary policy or …

affects the relation between nominal interest rates, inflation expectations, and real interest rates. The benchmark parameters … include stronger inflation targeting and more active monetary policy …

Although inflation-linked bonds have many advantages, nominal bonds are the most important instrument to finance public … monetary policies more effective. This paper reconsiders this argument with a model that features an inflation risk premium in …, inflation-linked bonds always outperform nominal bonds. The case of commitment qualifies this result. Still, also commitment …