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The Ties that Bind: Measuring International Bond Spillovers Using the Inflation-Indexed Bond Yields

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Author Info
Andrew Swiston
Tamim Bayoumi

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Abstract

This paper explores international bond spillovers using daily and intra-day data on yields on inflation-indexed bonds and associated inflation expectations for the United States, Australia, Canada, France, Sweden, Japan, and the United Kingdom. The analysis starts in 2002, by which point U.S. inflation-indexed markets were fully mature. Real bond yields are found to be closely linked across countries, with developments in U.S. markets determining around half of real foreign yields and no evidence of spillovers back to the United States. Spillovers in inflation expectations are smaller and the direction of causation is less clear.

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Publisher Info
Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/128.

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Length: 40 pages
Date of creation: 13 Jun 2007
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Handle: RePEc:imf:imfwpa:07/128

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Related research
Keywords: Working Paper ; Real interest rates ; Inflation ; Bonds ;

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  1. Andrew Swiston & Tamim Bayoumi, 2007. "Foreign Entanglements: Estimating the Source and Size of Spillovers Across Industrial Countries," IMF Working Papers 07/182, International Monetary Fund. [Downloadable!]
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