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20 de enero 2017
Addicted to Debt: Foreign Purchases of U.S. Treasuries and the Term Premium

This paper investigates the effect of purchases of U.S. Treasury bonds by foreigners on long-term yields and the term-premium. I set up a consumption-based model with habit preferences, calibrate it to match the average slope of the yield curve in the U.S., and find that foreign purchases decreased long-term yields significantly over the period prior […]