00000nam 2200000zi 4500 9.885529 CaOODSP 20221107171153 m o d f cr |n||||||||| 200311t20202020oncd ob f000 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2020-6E-PDF Diez de los Rios, Antonio. A portfolio-balance model of inflation and yield curve determination / by Antonio Diez de los Rios. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 1 online resource (iii, 43, 4 pages) : charts. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-6 Cover title. Includes bibliographical references (pages 31-32). "We propose a portfolio-balance model of the yield curve in which inflation is determined through an interest rate rule that satisfies the Taylor principle. Because arbitrageurs care about their real wealth, they only absorb an increase in the supply of nominal bonds if they are compensated with an increase in their real rates of return. At the same time, because the 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 increase in the supply of nominal bonds to compensate arbitrageurs for the additional supply they have to hold"--Abstract. Inflation (Finance) Monetary policy. Inflation. Politique monétaire. Canada. Bank of Canada. Staff working paper (Bank of Canada) 2020-6. (CaOODSP)9.806221 PDF 575 KB https://publications.gc.ca/collections/collection_2020/banque-bank-canada/FB3-5-2020-6-eng.pdf