We propose a portfolio-balance model of the yield curve in which inflation is determined through an interest rate rule … Taylor principle implies that short-term nominal rates are adjusted more than one for one in response to changes in inflation …, the real return on nominal bonds depends positively on inflation. In equilibrium, inflation increases when there is an …

inflation. Original sin seems to be on the way out, as more and more countries are issuing local currency debt at longer …

In Canada, targeting the inflation rate was intended as a temporary measure on a journey to price-level stability, but … account, changing beliefs about the stability or otherwise of ongoing inflation, the capacity of a flexible exchange rate to … inflation targeting arrived on the scene only after the Canadian regime was well established. …