The british government has issued inflation-indexed bonds


The British government has issued inflation-indexed bonds for many years.

(a) Explain briefly how you can form expectations about inflation using the rates on the non-indexed and the inflation-indexed bonds.

(b) Can the ex ante real interest rate be negative on non-indexed government bonds in Britain?

(c) Can the ex post real interest rate be negative on non-indexed government bonds in Britain?

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International Economics: The british government has issued inflation-indexed bonds
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