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I think it will help to fill in some of the missing causal elements in this picture. Suppose a classical economy at equilibrium, and understanding "growth" as growth in nominal GDP, When growth and inflation are primarily driven by aggregate demand... All else equal, a positive demand shock (rightward shift) leads to higher consumption (growth) and ...


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When growth and inflation are primarily driven by aggregate demand, nominal bond returns tend to be negatively correlated with growth Actually, the above sentence is the explicited version of what you have in mind, i.e. the links between nominal (vs real) returns, (demand-driven) inflation and growth. when growth and inflation are primarily driven by ...


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Here are some hand-wavy arguments to suggest that the "no-arbitrage" rule applies here: Bond-buying at the scale that nation-states would do it would drive up prices. So you'd see yields on Brazilian bonds fall even if coupon rates don't move. Germany would have to finance such a play by issuing yet more bonds, which would drive German bond prices down and ...


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