Equilibrium Growth, Inflation, and Bond Yields - Duke University's ...
Equilibrium Growth, Inflation, and Bond Yields - Duke University's ...
Equilibrium Growth, Inflation, and Bond Yields - Duke University's ...
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Figure 7: Expected <strong>Inflation</strong> <strong>and</strong> <strong>Growth</strong> Mechanisms (Expected <strong>Growth</strong> Shock)<br />
x<br />
l<br />
a<br />
w−k<br />
0.4<br />
0.2<br />
LRP Shock (ε x > 0)<br />
0<br />
0 20 40 60<br />
1<br />
0<br />
−1<br />
0 20 40 60<br />
2<br />
1<br />
0<br />
0 20 40 60<br />
1<br />
0.5<br />
0<br />
−0.5<br />
0 20 40 60<br />
quarters<br />
mc<br />
π<br />
E[π]<br />
n−k<br />
4<br />
2<br />
0.05<br />
LRP Shock (ε x > 0)<br />
0<br />
0 20 40 60<br />
0<br />
−0.05<br />
0 20 40 60<br />
0.1<br />
0.08<br />
0.06<br />
0.1<br />
0.08<br />
0.06<br />
0 20 40 60<br />
0.04<br />
0 20 40 60<br />
quarters<br />
This figure shows quarterly log-deviations from the steady state for the exogenous growth model model with a<br />
stochastic trend EXO 2 from a one st<strong>and</strong>ard deviation shock to expected productivity growth. All deviations are in<br />
annualized percentage units.<br />
50
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