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TIPS and the risk of deflation

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  • Jens H. E. Christensen

Abstract

The low level of inflation and the sluggish pace of economic recovery have raised concerns about sustained deflation?an inflation rate below zero with a general fall in prices. However, the relative prices of inflation-indexed and non-indexed Treasury bonds, which historically have proven to be good measures of inflation expectations, suggest that financial market participants consider the probability of deflation to be low.

Suggested Citation

  • Jens H. E. Christensen, 2010. "TIPS and the risk of deflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct25.
  • Handle: RePEc:fip:fedfel:y:2010:i:oct25:n:2010-32
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    References listed on IDEAS

    as
    1. Zheng Liu & Glenn D. Rudebusch, 2010. "Inflation: mind the gap," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jan19.
    2. Jens H. E. Christensen, 2009. "Inflation expectations and the risk of deflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov2.
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