Motivated by economic-theory concepts - the Fisher hypothesis and the theory of the term structure - we consider a … small set of simple bivariate closed-loop time-series models for the prediction of price inflation and of long- and short …

. Under monetary regimes (such as inflation-targeting) making inflation I(0), the easiest way to implement the proposed …-and then () subtract from this inflation's sample average (or target), thus obtaining the real natural rate. More complex … presents two key advantages: (1) under regimes making inflation I(0), M1 velocity is equal, up to a linear transformation, to …

. Under monetary regimes (such as inflation-targeting) making inflation I(0), the easiest way to implement the proposed …-and then (ii) subtract from this inflation's sample average (or target), thus obtaining the real natural rate. More complex … presents two key advantages: (1) under regimes making inflation I(0), M1 velocity is equal, up to a linear transformation, to …