Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The difference between nominal and real interest rates (break-even inflation) is often used to gauge the markets inflation expectationsand has become an important tool in monetary policy analysis. However, break-even inflation can move in response to shifts in inflation risk premia and liquidity premia as well as to changes in expected inflation. This paper sheds light on this issue by analyzing the evolution of U.S. break-even inflation from 1997 to mid-2008. Regression results show that survey data on inflation uncertainty and proxies for liquidity premia are important factors.