Found the following very interesting statement on bond prices,
"The yield on a risk-free government bond should equal the growth in nominal GDP since that represents the opportunity cost of holding a government bond both in terms of investment opportunities (real GDP) and the time value of money (inflation)"
Question) How does one square the circle of this statement and the "expectations hypothesis"?
Question)Is future growth or short term rates that determine longer rate? or are these two the same somehow?