Predicting Real Growth and Inflation With the Yield Spread
نویسنده
چکیده
Analysts often use financial variables to help predict real activity and inflation. Financial variables offer readily accessible information and, because market participants base their investment decisions on their forecasts of real activity and inflation, the information in financial market variables is deemed to be reliable. One of the most popular financial market variables is the spread between yields on long-term and short-term government instruments, also known as the yield spread. This article examines the predictive power of the yield spread for real growth and inflation in a collection of industrialized countries.
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