BoJ paper outlines idea of ‘natural yield curve’
Curve defines level of natural rate of interest at all maturities
A working paper published today (June 4) by the Bank of Japan (BoJ) has laid out the concept of a ‘natural yield curve' as a useful indicator for monetary policy.
In The natural yield curve: its concept and measurement, authors Kei Imakubo, Haruki Kojima and Jouchi Nakajima discuss how to measure such a curve, which plots the natural rate of interest for all maturities.
Similar to the calculation of the natural rate, they derive the curve from an IS curve, which describes the relationship
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