01743cas a2200241 a 4500 AALejournalIMF018840 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484382370 1018-5941 BD-DhAAL BD-DhAAL Katagiri, Mitsuru. Equilibrium Yield Curve, the Phillips Curve, and Monetary Policy / Mitsuru Katagiri. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Upward sloping yield curves are hard to reconcile with the positive association between income and inflation (the Phillips curve) in consumption-based asset pricing models. Using US and UK data, this paper shows inflation is negatively correlated with long-run income growth but positively correlated with cyclical income, thus enabling the model to replicate positive and sizable term premiums, along with the Phillips curve over business cycles. Quantitative analyses also emphasize the importance of monetary policy, predicting that a permanently low growth and low inflation environment would precipitate flatter yield curves due to constraints to monetary policy around the zero lower bound. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2018/242 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/242/001.2018.issue-242-en.xml IMF e-Library